ObamaCare’s Pay Cut


There’s no such thing as a free lunch. This is one of life’s earliest lessons every individual must learn. When you think you’re getting something for free – beware! You’re probably paying for it somewhere else.

This truth has been proven once again in a recent study of ObamaCare’s impact on wages. The “free lunch” is carrying your dependent children on your healthcare insurance policy until they are age twenty-six.

In addition to coverage of pre-existing conditions, one of the most popular features of ObamaCare was that parents could keep their children on their policy until age twenty-six. The price of the premium is much less for the addition of children than it is for additional adults. So many parents thought this was a good thing since they could better afford the insurance than their children who were either still living at home or at least struggling to make it on their own.

But now comes the results of a study by Gopi Shah Goda and Jay Bhattacharya of Stanford and Monica Farid of Harvard, reported in The Wall Street Journal.

“We find evidence that employees who were most affected by the mandate, namely employees at large firms, saw wage reductions of approximately $1200 per year.”


How does this happen?

Employers must make difficult choices with a finite amount of money. They have just so much money available to pay out in overhead expenses like healthcare insurance premiums for employees and for higher wages. When you spend the money on one there is no money left to pay for the other.

The insurance companies are not covering those dependent children to age 26 without expenses of their own. They pass the cost of that coverage on to the beneficiaries. They must raise the price of the premiums to cover those expenses.

Therefore employers are spending more money on healthcare insurance premiums leaving them less to pay out in higher wages. The researchers at Stanford and Harvard calculated the impact on employees as the same as a $1200 pay cut. Not in lost wages – but in lower wages than they would have enjoyed if their employer didn’t have to pay for coverage of their dependent children.

Perhaps you think this didn’t affect you since you don’t have dependent children on your healthcare policy. Wrong. The study also found that the costs of the adult-kid mandate weren’t “only borne by parents of eligible children or parents more generally.” They’re spread across all workers including other young people, the childless and the late-middle-aged.

This is yet another example of how policies of the Obama administration have contributed to income inequality and the lowering of income for the middle class. According to the U.S. Census Bureau, median household income has fallen from $55,516 in 2008, the year before President Obama took office, to $51,939 in 2014, the latest data available. That’s a drop of $3,577 per household in the first six years of the Obama administration. ObamaCare is one of the reasons.

So that “free lunch” actually costs $1200 per year. Pretty expensive eating! Perhaps that explains why your employer hasn’t been able to give you a pay raise lately?

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