The Affordable Care Act could reduce the number of full-time workers in the United States by 2 million in 2017 and 2.5 million in 2024, according to a new report from the Congressional Budget Office.
Congressional Republicans pounced on the report as proof that Obamacare is every bit the “job-killer” they promised it would be. But it’s not that simple.
The report says the reduction comes “almost entirely” from a decrease in the amount of time laborers choose to spend at work, rather than a substantial decline in the amount of work businesses are offering.
The law’s incentives and subsidies may give some workers less of a reason to work. Under the Affordable Care Act, individuals who earn up to 400 percent of the federal poverty level qualify for assistance to buy health insurance. Some may want to keep their hours down in order to qualify; others may see the subsidized coverage as an opportunity to reduce their hours for other reasons.
The estimate of the effect of the law on the workforce, which was part of a regular update of the nonpartisan CBO’s 10-year budget and economic outlook released Tuesday, was a significant departure from earlier estimates. Previously, the CBO estimated that Obamacare would reduce household employment by 800,000 in 2021. According to the new report, employment would fall by 2.3 million that year. The report only covered the years 2014 to 2024, but the agency said the employment effects would likely continue after that time period.
Caveats aside, the new figures were fodder for a fresh round of Republican attacks on the health reform law. Congressional Republicans have sought to repeal or alter the Affordable Care Act since its passage in 2010; among the criticisms most frequently directed toward the law is that it will drive up costs for businesses and hurt job creation.
“The middle class is getting squeezed in this economy, and this CBO report confirms that Obamacare is making it worse,” House Speaker John Boehner, R-Ohio, said in a statement.
Sen. Orrin Hatch, R-Utah, the ranking member of the Senate Finance Committee, referred to the report as “terrible news” in a separate statement. “A direct threat to the long-term health and prosperity of our nation, this law must be repealed,” Hatch said.
Both CBO Director Douglas Elmendorf and the White House cautioned that the new figures should be interpreted carefully. The White House focused on the employee choice aspect. “That is different from saying … the employer’s going to destroy a job because of the Affordable Care Act [and] now they can’t get it,” senior administration officials said in a call with reporters.
The full-time worker figure stems from the budget office’s calculation that Obamacare would reduce the total number of hours worked by 1.5 to 2.0 percent between 2017 and 2024, which is the equivalent of 2 to 2.5 million full-time workers.
The numbers changed substantially, Elmendorf said Tuesday, because the agency found new channels, like the requirement for employers to provide coverage for all full-time employees, through which the Affordable Care Act would reduce the labor supply. The CBO also drew on new evidence of how changes in tax rates and Medicaid expansions and contractions have affected the labor supply in the past.
The CBO’s estimates of the impact on the workforce are tied to how many people sign up for Obamacare under the newly created health insurance exchanges. Right now, CBO estimates that 6 million people will sign up this year. If more sign up, then the impact of the law on employment will be greater; if fewer people sign up, the effect will be smaller. As with all of the CBO’s forecasts, uncertainty abounds.
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