- The Washington Times - Sunday, September 8, 2013

The scheme is about to blow up the incentive to work

Amere three weeks remain before the Obamacare exchanges open for business. The likely result will be the closing doors on Main Street, as shopkeepers and entrepreneurs shut down, unable to make ends meet. It’s clear that the wounded economy can’t cope with the exploding costs ahead.

Ohio announced that premiums would rise in the individual market by an average of 88 percent next year. Premiums will rise 72 percent in Indiana, 125 percent in Wisconsin. Even California, with its relatively robust individual market, is bracing for increases of 66 percent.

The Obamacare train wreck bearing down on us is about far more than higher costs. A study by University of Chicago economist Casey B. Mulligan documents the perverse Obamacare incentives that encourage Americans to become much less productive. He estimates that the legislation acts as a payroll tax increase for about half the working, non-elderly population earning an average weekly wage. Obamacare will turn those who work hard into losers, declaring part-timers the winners.

A typical family of four with an income of up to $94,200 will get a generous subsidy for health insurance if the head of the house drops out of full-time work and becomes a part-timer. It’s an implicit payroll tax increase of almost 5 percent. The net result is a reduction in productivity throughout the economy.

Imposing a large new tax will persuade many that long hours are for suckers. Many will decide that it isn’t worth the effort and drop out of the work force. Why work full-time to see the money taxed away? Better to work fewer hours and keep the same after-tax income.

Obamacare imposes additional pressure on bosses to move employees to part-time status to avoid large penalties by the IRS. Businesses and some public-sector employers have begun slashing their employees’ hours already.

In the past month alone, 312,000 Americans abandoned the search for a job, as labor force participation, already at levels not seen since the Carter administration, dropped another notch. This can only grow worse with Obamacare telling employers and employees to work less — or not at all.

A vibrant economy is the reward of hard work by a lot of Americans, and the government should encourage productivity, not penalize it. Obamacare is a prescription for a shrinking economy, and the nation won’t recover from stagnation as long as it remains the law. In the weeks ahead, the House will get one last chance to prevent the train wreck. The House must stand firm and refuse to fund the president’s health care takeover.