But the Scrap Metal Is Tax Deductible by Pat Conrad MD


Does ObamaCare kill jobs? “Yes”, if you listen to the GOP or Fox News; “No” if you listen to the Democrats or Comedy Central. So what is the truth?

Years ago, when I was foolishly trying to set up a clinic with another family doc, we scheduled some hiring interviews. One of the occupants of the clown car that apparently pulled up out front was an older nurse clearly looking for a pasture in which to linger. Her sales pitch was that although she was disabled and not allowed to lift more than 10 lb., we could get special federal tax breaks by hiring a disabled person. I thought then, as I do now, that I had not gotten to this point to become someone else’s social program (admittedly ironic, coming from a family practice doc); and that tax break or not, it would still be a net money loser to hire someone who couldn’t do the damn work. So what does that have to do with ObamaCare? The new mandates and increased costs of the ACA make any new employee a potential liability. Even if they can do the job, what good is it if they don’t make the company a profit?

Arbitrarily raising the cost of labor automatically devalues that labor. If the employer thinks it makes good economic sense to provide health insurance for the workers, then he won’t need to be forced to it. It’s kind of like being forced to buy an EHR, except you can unplug that and chuck it in the dumpster if it threatens to sue you over disability discrimination. Being forced to do something with the promise that compliance will limit your net loss only makes sense to socialists, for whom giving away other peoples’ work always makes sense.

An article in “The Hill” reports the CBO is projecting a loss of labor hours [the] “equivalent of 2 million jobs over the next decade.” This almost 1% predicted shrinkage in the labor force is attributed to workers choosing to work fewer hours, quit/retire, or remain unemployed for longer periods, sustained by the gerrymandered federal subsidies. This is not a prediction of mass firings, but of the results of workers’ choices. In effect, ObamaCare has allowed a new range of worker options at the employer’s (literal) expense, a real and entirely arbitrary increase in the cost of labor. “The Hill” piece ends warily, “The CBO said its estimates were still based on uncertain evidence, citing, for example, that it does not know yet how people will respond to the work incentives created by the law.”

Unsatisfied, I looked at this same story in “The Fiscal Times“, whose headline reassured that “Obamacare Won’t Really Cost the U.S. 2 Million Jobs.” Whew. By 2025, the “CBO estimates, the ACA will make the labor supply, measured as the total compensation paid to workers, 0.86 percent smaller than it would have been in the absence of that law.”

On the surface that doesn’t sound too bad. But wouldn’t 1% less wages paid have a multiplier effect across tax revenues, additional state and federal benefits paid out, and decreased spending amongst that 1% that would dampen the outlook for their retail neighbors? “Glenn Kessler, The Washington Post’s fact checker, wrote last year that “this is not about jobs offered by employers. It’s about workers — and the choices they make.”” Aha! Didn’t someone else just make that incredibly brilliant point?

The Fiscal Times also notes that:

  • the ACA’s “phasing out health insurance subsidies as people’s income goes up creates a disincentive to work more.”
  • Other provisions of the law will reduce the labor supply “by imposing higher taxes on labor income directly” — for example, the ACA’s increase in the payroll tax that higher-income workers must pay for Medicare’s Hospital Insurance program.”

The article dismisses the gloom and doom, cooing “In reality, the country has experienced 69 consecutive months of job expansion since enactment of Obamacare, while the unemployment rate was cut in half.” If you follow the news, you’ll know how nakedly bogus that statement is. If you don’t, then we don’t have the time in this column.

What neither article can say is how much unrealized economic growth is a direct result of ObamaCare. How many small businesses declined to hire that magical 50th worker that would invite the feds in? With premiums blasting off, how many corporations large and small have curtailed further hiring precisely to avoid these fiscal punishments, not just in this year, but in the decade to come?

The bottom line is that any sort of employer mandate increases the cost of labor. Anything increasing your overhead without a commensurate profit increase is a disincentive. That is why increasing the minimum wage to $15/hour won’t fix anything, and why ObamaCare was never going to be pro-business (except for Big Insurance). When McDonald’s finally figures out the best PR angle to replacing human workers with burger ‘bots, this will be the reason.

Douglas Farrago MD

Douglas Farrago MD is a full-time practicing family doc in Forest, Va. He started Forest Direct Primary Care where he takes no insurance and bills patients a monthly fee. He is board certified in the specialty of Family Practice. He is the inventor of a product called the Knee Saver which is currently in the Baseball Hall of Fame. The Knee Saver and its knock-offs are worn by many major league baseball catchers. He is also the inventor of the CryoHelmet used by athletes for head injuries as well as migraine sufferers. Dr. Farrago is the author of four books, two of which are the top two most popular DPC books. From 2001 – 2011, Dr. Farrago was the editor and creator of the Placebo Journal which ran for 10 full years. Described as the Mad Magazine for doctors, he and the Placebo Journal were featured in the Washington Post, US News and World Report, the AP, and the NY Times. Dr. Farrago is also the editor of the blog Authentic Medicine which was born out of concern about where the direction of healthcare is heading and the belief that the wrong people are in charge. This blog has been going daily for more than 15 years Article about Dr. Farrago in Doximity Email Dr. Farrago – [email protected] 

  3 comments for “But the Scrap Metal Is Tax Deductible by Pat Conrad MD

  1. DrG
    December 16, 2015 at 11:54 am

    The problem with socialism is that sooner or later you run out of other peoples money to spend.

  2. Pat
    December 12, 2015 at 5:39 pm

    Apologies to readers: the pic I tried to attach was of an ol’ timey train wreck, with lots of twisted wreckage, the perfect symbol for the ACA. Alas, my tech skills failed me, use you imagination. Cheers, Pat

  3. Steve O'
    December 12, 2015 at 7:55 am

    Thanks, and you know, it explains a lot of the riddle surrounding large organizations and primary care clinics. For a profession that’s in “critical shortage,” there’s nobody hustling around trying to recruit doctors. Sure, they TALK a lot about it, and the witless headhunters call mindlessly, trying to see if I’m interested in working at a vein clinic in Dubuque. But nobody’s out there knocking on doors to try to add to their incremental primary care staff, because there’s no apparent incentive to do so. Nothing much larger than DPC can survive the financial downpressure on the primary care office.

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