Health law may hit job creation, says watchdog
February 04 2014 11:24 PM

The White House launched a swift damage control effort yesterday after a congressional watchdog suggested President Barack Obama’s health care law would mean the equivalent of more than 2mn fewer jobs.

The report by the Congressional Budget Office offered fresh ammunition to gleeful Republicans who said it proved their long-held argument that Obamacare, which they have repeatedly tried to repeal, would “kill” jobs.

But the White House argued that the data in the report was being misinterpreted and said that claims the Affordable Care Act would turf people out of work were simply not borne out by the facts—even those in the report.

“Claims that the Affordable Care Act hurts jobs are simply belied by the facts in the CBO report,” White House spokesman Jay Carney said in a statement, which appeared just before the White House conducted a hurriedly organised call for reporters.

“Since the Affordable Care Act passed into law in March 2010 the private sector has added 8.1mn jobs,” Carney said.

“That is the strongest 45 month job growth since the late 1990s and contrasts with the 3.8mn private sector jobs lost in the decade before the Affordable Care Act passed.”

The White House argued that the act would allow people to make more choices about their lives—they would for instance no longer have to stay in a dead end job just because it provided healthcare.

A senior administration official insisted on condition of anonymity that expanded federal incentives for workers to buy healthcare would actually have a stimulatory impact on the economy.

Others said a healthier work force would lead to fewer sick days and higher productivity.

The non-partisan CBO report estimated that the ACA will reduce the total number of hours worked by between one and 2% during the period from 2017 to 2024.

It said the reduction will be driven mainly by low wage workers who chose to work less because of new taxes applying under the ACA.

The changes will amount to a roughly 1% reduction of aggregate labor compensation between 2017-2024.

That equates to around 2mn fewer full time workers in 2017 rising to about 2.5mn in 2024, the report said.

The CBO still projects total employment will rise over the coming decade, but believes it will do so less than it would have if Obamacare had not been passed.

Republicans seized an immediate opening.

“For years, Republicans have said that the president’s healthcare law creates uncertainty for small businesses, hurts take-home pay, and makes it harder to invest in new workers,” said House Speaker John Boehner.

“The middle class is getting squeezed in this economy, and this CBO report confirms that ObamaCare is making it worse.”

The CBO said the biggest impact on work hours from the health law would begin in 2017 because major provisions of the law will be well under way by then. The CBO said there would be smaller declines in work hours that would occur before then.

“The ACA also will exert conflicting pressures on the quantity of labor that employers demand, primarily during the next few years,” the agency said. But CBO said the expected drop in work hours between 2017 and 2024 would result largely from worker decisions not to participate in the labor force, rather than from higher unemployment or the inability of part-time workers to find full-time hours.

“The estimated reduction stems almost entirely from a net decline in the amount of labor that workers choose to supply, rather than from a net drop in businesses’ demand for labor,” CBO said.

According to the report, federal subsidies can be substantial, particularly for lower-wage workers who receive more under the law’s sliding income scale. But that also means the benefits can be phased out as a worker’s income rises.

“The phaseout effectively raises people’s marginal tax rates (the tax rates applying to their last dollar of income), thus discouraging work,” CBO said. The agency also said that if higher taxes were required to pay for subsidies, the effect would also be to discourage work and create other economic distortions.

The CBO said the healthcare law is not expected to reach its initial goal of enrolling 7mn uninsured Americans in health insurance this year, due to its botched rollout. In a fresh forecast for 2014, the CBO estimated that only 6mn people would sign up for private coverage through new health insurance marketplaces.

Technical problems that largely paralysed the website HealthCare.gov after its initial rollout discouraged many Americans from enrolling.

 

 

 

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