The Economics of the Affordable Care Act

With Obama’s reelection and the Democratic Party’s control of the Senate it appears that The Affordable Care Act is here to stay (it would still be with us had Romney won, he’d have just repealed it and replaced it with the same thing but under a different name). Now that the law is starting to go into affect we’re seeing the unintended consequences. Since the legislation raises the costs for many business owners we’re seeing changes in employment methodology. Many companies are laying off employees to avoid the financial burdon of the legislation, other companies are cutting employee hours, and now some franchises are going to implement surcharges to offset the additional expenses of Obamacare:

While some business owners threaten to cut workers’ hours to avoid paying for their health care, a West Palm Beach, Fla., restaurant owner is going even further. John Metz said he will add a 5 percent surcharge to customers’ bills to offset what he said are the increased costs of Obamacare, along with reducing his employees’ hours.

“If I leave the prices the same, but say on the menu that there is a 5 percent surcharge for Obamacare, customers have two choices. They can either pay it and tip 15 or 20 percent, or if they really feel so inclined, they can reduce the amount of tip they give to the server, who is the primary beneficiary of Obamacare,” Metz told The Huffington Post. “Although it may sound terrible that I’m doing this, it’s the only alternative. I’ve got to pass the cost on to the consumer.”

Economically literate individuals expected this to happen. You can’t increase the costs faced by a business and not expect that business to compensate. Unfortunately man people are economically illiterate and are therefore throwing a fit about the layoffs, slashed hours, and additional surcharges. The economically illiterate are advocating businesses that adjust their employment methodology in response to Obamacare be boycotted or sued.

What’s ironic is the economically illiterate got exactly what they wanted, Obamacare. As with anything there were consequences and now advocates of Obamacare are trying to escape those consequences. The only lesson that should be learned here is to be careful what you wish for.