Pelosi's Claim on Health Care Jobs: A Reality Check

Strategic Insights -

House Speaker Nancy Pelosi stated that health care reform would "create 4 million jobs, 400,000 jobs almost immediately." However, her claim is an exaggeration of a more moderate estimate from a study by the Center for American Progress. The study found that health care reform could produce an average of 250,000 to 400,000 jobs per year over the next decade, with some years potentially producing higher numbers.

Key Takeaways:

  • Pelosi's claim is based on a study by the Center for American Progress, which estimates that health care reform could produce an average of 250,000 to 400,000 jobs per year over the next decade.
  • The study's authors, David Cutler and Neeraj Sood, modeled two scenarios, with medical cost reductions occurring at a moderate 0.75 percentage points annually or as high as 1.5 percent annually.
  • Pelosi's claim of 4 million jobs created in 10 years is an overstatement of the study's findings, which suggests that some years could produce higher numbers of jobs, but not consistently.
  • The Congressional Budget Office (CBO) concludes that requiring employers to offer health insurance will reduce employment, but the effect is likely to be small.
  • The Center on Budget and Policy Priorities has also analyzed the potential impact of an employer mandate on employment, finding that it could deter employers from hiring low-wage workers and lead to job losses.
  • The current proposals, including fines on employers who don't provide health insurance, make it difficult to quantify the number of jobs created or lost due to health care reform.

Statistics:

  • Average of 250,000 to 400,000 jobs per year over the next decade (Center for American Progress study)
  • In 2013, the number of jobs created under the second scenario (1.5% annual medical cost reductions) would be about 210,000 (Center for American Progress study)
  • In 2019, the number of jobs created under the second scenario would be about 800,000 (Center for American Progress study)
  • 224,000 workers could be unemployed if employers were required to provide insurance that cost, on average, $2 per hour worked (study from 2007)
  • 750,000 jobs could be lost if employers were required to offer insurance (study from 2007)
  • Impact on employment would be "small" if requiring employers to offer health insurance (Congressional Budget Office report)

Sources:

  • Center for American Progress, New Jobs Through Better Health Care, by David Cutler and Neeraj Sood, January, 2010
  • The Executive Office of the President: Council of Economic Advisers, The Economic Case for Health Care Reform: Update, Dec. 14, 2009
  • The Congressional Budget Office, Effects of Changes to the Health Insurance System on Labor Markets, July 13, 2010
  • The Center on Budget and Policy Priorities, Employer Requirement Under Consideration For Senate Finance Committee Health Bill Could Discourage Hiring of Low-Income, Minority, Disabled Workers, By Judith Solomon and Robert Greenstein June, 24, 2009
  • The Heritage Foundation, Economics of Play-or-Pay Mandates in Health Care Reform Bills, by D. Mark Wilson, Aug. 28, 2009