Work Less, Make More

Obamacare incentives


Cut your work hours and have more money to spend: How many people wouldn't take that deal? Thanks to the combination of rules and benefits built into the federal health care overhaul, it's an opportunity that millions of Americans will soon have before them, according to a March paper by University of Chicago economist Casey Mulligan.

Mulligan's paper, published through the National Bureau of Economic Research, argues that under the Affordable Care Act (ACA), somewhere between 6 million and 11 million employed individuals would actually see an increase in their disposable income by cutting average weekly work hours. Mulligan estimates that roughly half of them "would primarily do so by making themselves eligible for the ACA's federal assistance with health insurance premiums and out-of-pocket health costs, despite the fact that subsidized workers are not able to pay health premiums with pre-tax dollars."

Mulligan's paper walks readers through the hypothetical example of a person deciding between a part-time job without health benefits and a full-time job with coverage included. Depending on how salaries and benefits are structured, once you factor in the cost of providing coverage to the employer and the subsidy offered to the part-time worker, the part-timer is actually left with a slightly higher compensation. Mulligan predicts that unmarried women are the demographic cohort most likely to be affected by the law's perverse incentives.

Some might see this as a bug, but for the Democrats behind the law, it's always been sold as a feature. Because of Obamacare, Democratic House Minority Leader Nancy Pelosi (Calif.) said in 2010, "if you want to be creative and be a musician or whatever, you can leave your work, focus on your talent, your skill, your passion, your aspirations because you will have health care." In other words: Work less and rely on federal benefits more.