How a Supreme Court Decision Against Obamacare Could be an Economic Boon

If the Supreme Court delivers a body blow to Obamacare in the King v. Burwell ruling expected next month, it could be an economic stimulus for the country, adding more than 1 million workers to the labor force and creating more than 200,000 new jobs, according to a new study.

The high court will decide on the definition of the words “established by the state,” written into the Patient Protection and Affordable Care Act that became law in 2010. The plaintiffs contend the legislative language clearly means that tax subsidies to buy health insurance can only be available to states that established their own health exchanges. That leaves out 37 states that didn’t set up an Obamcare marketplace. The Obama administration argues the language broadly meant all exchanges were eligible for federal tax subsidies.

If the court rules against the government, 7.7 million individuals will lose their health insurance subsidies, according to the study, for an average of $3,156 per person. Many of these people had insurance before, Douglas Holtz-Eakin, president of the American Action Forum, a conservative think tank that conducted the study, told reporters Thursday. Holtz-Eakin is also a former director of the Congressional Budget Office and former chairman of the Council of Economic Advisers,

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The flipside is that the individual and employer mandates will become unenforceable, the study says. This will prompt companies to hire more people, and give part-time employer more hours.

With 11.1 million individuals and 262,000 businesses free from the mandate, it would lead to the creation of 237,000 new jobs, add another 1.2 million workers to the labor force, and increase hours for 3.3 million part time workers. The study also projects wages will increase per worker between $830 and $940 per year, for a total increase in pay of $13.6 billion.

“There will be fewer administrative burdens when employers offer full-time employment to qualified employees who will have the opportunity to become specialized and therefore more efficient in their work,” the study says. “We might also expect to see more job growth in these states as employers expand their businesses and offer more hours without the cost of complying with the ACA.”

Holtz-Eakin, suspects that if the court rules in favor of King, that Congress will feel compelled to act, even though he thinks that might be wrong course.

“Republicans will likely look for some solution that lifts the regulatory regime of the Affordable Care Act,” Holtz-Eakin said Thursday. “The political question is at some point the Republicans will pass something in Congress and have a standoff. The president is very unlikely to accept any changes to the ACA.”

Sen. Ron Johnson (R-Wisc.) sponsored a bill that would extend payment of federal subsidies to 2017, but require the individual mandate in Obamacare go away.

Brittany La Couture, the health policy counsel at the American Action Forum, said the study was done under the presumption that no legislative fixes would occur since there was no certainty.

“Because they will not be subject to the mandate, small to medium size employers may expand employment to more people, or allow their employees to work more than 30 hours per week,” the study further says. “AAF estimates that there are currently about 3.3 million part-time workers in the states affected by the ruling who are seeking but are unable to find full-time employment.”

The American Action Forum is a conservative think tank, but was credited in a New York Times column for “following the numbers” and not being swayed purely by ideology.

In further explaining the additional jobs, the study says, “there are about 261,844 employers in the 37 King states that are subject to the mandate penalty, 146,407 of which are medium-sized employers, who were the most impacted by the employer mandate.”

“Absent the administrative and financial burdens imposed by the ACA mandates, the recent trend away from full-time hiring that has cost Americans more than 350,000 jobs—237,000 of which are in King states—may be reversed and these and countless other small employers may begin hiring more full-time workers,” the study continues.

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