In a sense, Obamacare amounts to a massive transfer of risk. Under the old system, if you quit your job and couldn’t get health insurance, you courted financial ruin every time you did something as mundane as riding your bike or playing pickup basketball. Now that risk is distributed to everyone who buys health insurance (including the government). Free of the massive financial risk of being alive, unemployed Americans can more easily take on risks associated with doing what they want to do.
Though this is a good thing for people like Braun [someone who started a business], it doesn’t look good for the labor force as a whole — at least on the surface. In February, the Congressional Budget Office estimated that the Affordable Care Act would reduce employment by the equivalent of 2.5 million full-time jobs. Opponents seized on this as evidence that Obamacare is a job killer. But that’s not what the C.B.O. meant. “The estimated reduction stems almost entirely from a net decline in the amount of labor that workers choose to supply, rather than from a net drop in businesses’ demand for labor,” the report says. In other words, if people work less, it will be by choice.
It may seem counterintuitive, but from an economics perspective, this is a good thing, because it encourages the labor force to allocate itself more efficiently. Older workers will finally be able to retire, leaving openings for younger workers. People will switch to jobs that better suit their talents. Parents will be able to spend more time with their families. Such changes don’t always make people wealthier, but they make people happier.