Fact Checker: Obamacare Won’t Really Kill 2 Million Jobs

Liberals, and the White House, are attempting to spin the CBO report that states that 2 million+ full time jobs will be lost thanks directly to Obamacare. They say this is not a bad thing. Do they have a point? Here’s Glenn Kessler, the Washington Post’s Fact Checker

Here we go again. During the 2012 campaign, The Fact Checker had to repeatedly explain that the Congressional Budget Office never said that the Affordable Care Act “killed” 800,000 jobs by 2021. Now, the CBO has released an updated estimate, nearly the triple the size of the earlier one: 2.3 million in 2021.

The Facts

First, this is not about jobs. It’s about workers — and the choices they make.

The CBO’s estimate is mostly the result of an analysis of the impact of the law on the supply of labor. That means how many people choose to participate in the work force. In other words, the nonpartisan agency is examining whether the law increases or decreases incentives for people to work.

One big issue: the health insurance subsidies in the law. That’s a substantial benefit that decreases as people earn more money, so at a certain point, a person has to choose between earning more money or continuing to get the maximum help with health insurance payments. In other words, people might work longer and harder, but actually earn no more, or earn even less, money. That is a disincentive to work. (The same thing happens when people qualify for food stamps or other social services.)

Thus, some people might decide to work part-time, not full time, in order to keep getting health-care subsidies. Thus, they are reducing their supply of labor to the market. Other people near retirement age might decide they no longer need to hold onto their job just because it provides health insurance, and they also leave the work force.

Look at this way: If someone says they decided to leave their job for personal reasons, most people would not say they “lost” their jobs. They simply decided not to work.

Well, that’s a good point. The jobs won’t actually be lost. It’ll just be people deciding to work less hours for their job. Here’s Greg Sargent

That’s not what the report says. Here is the key passage, on page 117:

Although CBO projects that total employment (and compensation) will increase over the coming decade, that increase will be smaller than it would have been in the absence of the aCA. The decline in full-time-equivalent employment stemming from the ACA will consist of some people not being employed at all and other people working fewer hours; however, CBO has not tried to quantify those two components of the overall effect. 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 business’ demand for labor, so it will appear almost entirely as a reduction in labor force participation and in hours worked relative to what have occurred otherwise rather than as an increase in unemployment (that is, more workers seeking, but not finding jobs) or underemployment (such as part-time workers who would prefer to work more hours per week).

The CBO report actually says that the impact of the ACA will be “almost entirely” due to a decline in labor that “workers choose to supply.” It says explicitly that the ACA’s impact will not be felt as an “increase in unemployment” or “underemployment.”

Hmm, people voluntarily deciding to work less hours. And the NY Times

The report did say that the law would reduce hours worked and full-time employment, but not because of a crippling impact on private-sector job creation. With the expansion of insurance coverage, the budget office predicted, more people will choose not to work, and others will choose to work fewer hours than they might have otherwise to obtain employer-provided insurance. The cumulative reduction of hours is large: the equivalent of 2.5 million fewer full-time positions by 2024, the budget office said.

The LA Times says the report is a good thing, and argues the same as above. So does the White House, liberal groups, and other Dems. Is this all bad? No. But, let me ask, how many people can voluntarily decide that they are going to work almost part time hours? And people will voluntarily choose not to work? How will they pay for Obamacare insurance? Who thinks companies will put up with this?

Let’s consider a big point avoided by all these Obamacare supporters: Ocare incents people to not work. Just like so many safety net programs. If Government provides, why work? Here’s The Hill

It instead found that the healthcare law will create disincentives for people to work and that this in turn will cut into the labor supply, hurt the economy, lower tax collection and cause higher deficits.

It’s creating a new “leisure class”, as Powerline notes.

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1 Comment

Comment by ReFrozen_Spring_Gumballs Subscribed to comments via email
2014-02-05 10:08:51

No matter who causes it, it is a bad thing when people reduce their workforce participation in order to get gov’t subsidies.

I knew this would happen as soon as I heard there would be subsidies attached to “make healthcare affordable”. Affordable to whom? Someone has to pay for those subsidies.

And now with fewer people working, the burden falls upon those still willing to work for a living. Talk about inequality.

The gov’t should not be in the business of giving individual people monies to purchase a private market good that they are mandated by law to buy in order to stay out of prison.

 

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