A new report by Harvard and USC economists says that the health care legislation making its way through Congress would slow the increase in health care costs, thereby freeing up money for businesses to raise wages and hire new workers. Authors of the report suggest anywhere from 250,000 to 400,000 new jobs per year could be created over the coming decade.
Savings and subsequent job creation could be accomplished through greater competition among insurance companies, better coordination and delivery of health care and reduced administrative costs. If these goals could be achieved, the researchers contend, employers would be able to reallocate money now wasted on sky-rocketing costs to other business needs. Harvard's David Cutler believes "we could achieve huge productivity gains."
Conservative economists, however, disagree, suggesting the proposed legislation would drive up costs by imposing billions of dollars in new taxes and penalties, which would have the opposite effect on business, forcing job cuts. According to the conservative Heritage Foundation, increasing taxes on the wealthiest Americans, as proposed by the House's bill, would eliminate more than 450,000 jobs in 10 years.
The foundation claims such taxes would weigh most heavily on small businesses, which operate on small profit margins while also creating most new jobs. "If small businesses are not hiring, you'll have higher unemployment and slower wage growth," claims Rea Hederman, Jr., a senior policy analyst at the foundation.
The Harvard-USC report could increase support for President Obama and his push for reform, as the President has highlighted the economic benefits of overhauling the health care system.
The Whitehouse Council of Economic Advisors has made the case that health care reform would raise household income and lead to new hiring.
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