How The Fed Views Obamacare

By now the general public has long made up its mind about Obamacare, aka the ACA, either positive or negative, and as such any anecdotes about its impact on the broader economy are usually covered by layers of political and ideological bias. One place, however, where the views on the ACA should be impartial is the Federal Reserve. Which is why we were surprised to note that in the just released Beige Book, whose market-moving impact is now absolutely irrelevant as the importance of fundamentals in a time of central planning is "modest to moderate" at best, there were no less than eight instances of "Affordable Care Act."  So in order to further the discussion and debate of Obamacare's impact on the economy from a purportedly apolitical entity, here is what the latest Beige Book had to say about Obama's crowning achievement.

Select Beige Book excerpts:

  • Employment growth remained modest in September. Several Districts reported that contacts were cautious to expand payrolls, citing uncertainty surrounding the implementation of the Affordable Care Act and fiscal policy more generally.
  • In regard to hiring and capital expenditure plans, firms continued to expand cautiously, as they face ongoing uncertainty from the federal government shutdown and implementation of the Affordable Care Act.
  • Most bankers remained optimistic, although they expressed uncertainty on behalf of their business customers and for themselves over the implications of both the Affordable Care Act and a prolonged government shutdown.
  • Most of our contacts are cautiously optimistic and expect little change in demand, although many were uneasy about fiscal issues and implications of the Affordable Care Act on their businesses.
  • There is anxiety about rising health insurance premiums, which was attributed to the Affordable Care Act.
  • Many of our contacts are concerned about the implementation of the Affordable Care Act and the effect it will have on their total labor cost.
  • Many contacts also commented on reluctance to expand due to uncertainty surrounding the Affordable Care Act; some employers cut hours or employees.
  • A number of contacts voiced concern about the uncertainty surrounding future employer and employee healthcare costs. In addition, several reported changing their health insurance enrollment periods this year in order to match the deadlines of the Affordable Care Act.
  • Staffing services firms noted flat demand overall since the last report but saw an unexpected decline in direct hires. One contact saw a few signed contracts designed to circumvent the Affordable Care Act (ACA) by utilizing a temporary employee full time, then hiring that person on a permanent but part-time basis when the ACA goes into effect.

The following "explanatory" schematic may explain why even the Fed sees "uncertainty" abound:

Source: Fed