Compliance with ObamaCare Estimated at 80 Million Man-hours

September 12, 2012

The costs associated with the Affordable Care Act (ACA) continue to stack up.

According to the Committee on Ways and Means and the IRS, compliance with the new healthcare law will take 80 million man-hours per year. Perhaps that sounds like a successful jobs program, as it will keep 40,000 people fully employed, filling out paperwork and sorting through a confounding pile of government regulations. Only problem is, that work is entirely wasteful and creates zero wealth for America as a whole. It would be better for America and for the 40,000 workers to do something useful, like build the empire state building 11 times over, to use the Ways and Means example.

But might it put otherwise unemployed people to work? No, not to any large degree and not any time soon. Instead, it mostly results in a shift of employment from productive activities to unproductive activities, from the private sector to the public sector, and a general cluttering up of the tax code.

Think of a small business trying to comply with Form 8941 – the Credit for Small Employer Health Insurance Premiums, which went into effect in 2010. This form alone takes 40 million man-hours to complete. As a result almost no one does. The Government Accountability Office finds that fewer than 10 percent of eligible businesses take advantage of this credit. But the real problem is that some businesses do try to comply, meaning they pay employees to fill out paperwork rather than build, create, and develop valuable products for customers. The IRS in turn pays employees to interpret, implement, adjudicate, and enforce this law. A virtuous circle, except someone has to pay the IRS. Guess who.

Ultimately, the only winners in such a maze of complexity are tax lawyers, accountants, and bureaucrats. Meanwhile, businesses continue to hold back on hiring. The Affordable Care Act is one reason private sector employment remains 4 million below the peak in 2008, while federal government employment has increased about 100,000. The charts below show this. (The large spikes in federal jobs in 2000 and 2010 are the result of temporary census hiring.)

Follow William McBride on Twitter @EconoWill

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