CBO Report Shows Affordable Care Act Frees Employees From Working Or Losing Employer-Based Insurance

The Congressional Budget Office has a report out today which is creating a lot of attention, largely due to a misleading but sensational headline in publications such as The Hill regarding decreased employment attributed to the Affordable Care Act.  They predict that there will be two million fewer full time workers by 2017. The question of employers hiring less due to the law is controversial, with evidence so far not showing the reduced hiring some have predicted. The key factor here, as described by The Wall Street Journal, is that “the jobs figures largely represent Americans who will choose not to work rather than those who will lose their jobs or have their workweeks reduced because of the law.”

In other words, this solves a major problem we have faced in the past–people being forced to work beyond when they otherwise desired because they would not be able to obtain insurance if they lost their insurance through their employer. People in their 60′s would have the ability they previously did not have of retiring before they qualified for Medicare at age 65.

Another factor might be that some people will have an economic incentive to work less. One aspect of the Affordable Care Act which should be fixed is the rapid manner in which the subsidies end once the income threshold is reached. People making just over the levels which qualify them for subsidies would be economically better off by working less and bringing their incomes below the threshold. The subsidies should be phased out more gradually to eliminate this problem.

The prediction of  two million fewer workers by 2017 also has to be taken with a grain of salt. There are aspects of the Affordable Care Act which will likely lead to economic improvement but which cannot be scored by the CBO. Some people will leave the job market, but it is also possible that many people, no longer needing insurance through their employer, will take advantage of this to start or work for small businesses. As the Affordable Care Act reduces the burden of providing health care to companies now providing it, these companies might be able to expand more  than expected. Improvements in the health of employees who obtain health care coverage could lead to improved productivity. Decreases in health care costs as a result of the Affordable Care Act should provide additional economic benefits.

As a consequence of the problems with the roll out of the Affordable Care Act, the CBO projects that six million people will sign up in private health plans through the exchanges this year, down from their previous projection of seven million. Most likely the number will increase in subsequent years, and it remains possible that increases in last-minute enrollment might lead to higher figures for this year. Another factor of concern is that some people are not signing up through the exchanges due to false information and a campaign from the right wing advocating that people refuse to sign up.

The report also shows that, while Republicans are demanding an end to the risk corridors in order to agree to an increase in the debt limit, the CBO found that the risk corridors actually wind up saving the government eight billion dollars. It is ironic that this Republican demand (actually more about politics than improving the deficit) would lead to a higher deficit.

We are no longer hearing about trillion dollar deficits. The CBO  projects a deficit of $514 billion in 2014, representing three percent of the Gross Domestic Product. This is near the average level for the past forty years, and a vast improvement from 2009 when deficit was at 10.1 percent of GDP. The CBO predicts a further reduction in 2015 to $478 billion, or 2.6 percent of GDP. They do project increases in the deficit after 2015 primarily due to weaknesses in the economy. It would seem that at present government policy should be to place greater emphasis on stimulating the economy as opposed  to concentrating on short term decreases in the deficit, as more Americans now support.

Update: The Fact Checker at The Washington Post says “No, CBO did not say Obamacare will kill 2 million job.” He awarded three Pinocchios to those, such as many media organizations which reported on the CBO report incorrectly, intentionally make this claim.

Update II: The CBO Report On The Success Of The Affordable Care Act

Update III: CBO Director States Affordable Care Act Will Reduce Unemployment; Paul Ryan Corrects Republican Misinformation

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5 Comments

  1. 1
    Joel says:

    Where do you live?  Colorado?  ‘Cause you’re smoking something.  The number of lost jobs and fewer hours will be terrible.  Didn’t you hear that cook ask obama how to afford anything since he can’t work full time anymore.

  2. 2
    Ron Chusid says:

    Check out the report. There will not be any significant number of lost jobs or fewer hours. The claims about this from the right wing media have turned out to be false, as the CBO found.

    There is no valid reason that a cook can’t work full time anymore because of the Affordable Care Act. There have been many stories like this from the right wing media. Each time, once the facts are checked out, the stories turn out to be incorrect. If this person was really reduced to part time, my bet it is because his employer was misled by the right wing media which is spreading scare stories. The employer mandate doesn’t take effect until 2015 so there is no reason why someone should have lost hours now. In addition, the subsidies would greatly reduce the cost to the employer, but often in these stories the subsidies are not taken into account. Plus if the restaurant has less than 50 employees, they would not be required to provide medical coverage.

  3. 3
    David Duff says:

    “You say ‘tomaytoes’ I say ‘tomartoes’. let’s call the whole thing off”:
     
    “Obamacare by the numbers, according to the Congressional Budget Office — labor lost: equivalent of 2.5 million full-time jobs over the next decade; insurance enrolment: down 1 million from earlier first-year estimate; cost: $1.2 trillion over the next decade; number of Americans uninsured: 30 million.
    Which is to say: We are spending $1.2 trillion and taking a blowtorch to the work force in order to fund a semi-public insurance system that still leaves tens of millions uncovered. And that’s assuming that CBO has not taken too rosy a view of Obamacare, which it may well have.”

  4. 4
    Ron Chusid says:

    Once again you are totally distorting the facts based upon your ideology (which appears to be based upon ignorance of the facts).

    The CBO’s findings are a very strong positive for the Affordable Care Act yet you try to twist it into a negative. It is not saying that anyone who wants to work will lose work or lose work hours. In fact, it directly contradicts conservative claims that this will happen.

    We have a huge problem in this country where people have to continue working longer than they want to, or cannot leave their current job for another job, because they will not be able to keep their health insurance. The Affordable Care Act solves this problem. The CBO report confirms that it is a success. People in their 60′s will be able to retire if they choose without going without insurance. People who want to start or work for a small business will be able to do so without losing their insurance.

    I have a diabetic patient whose husband decided to retire in his early 60′s and she was suddenly without insurance for several months, struggling to pay her medical bills and for her prescription. As of January she once again has health insurance. I have other patients who could not receive coverage in the past because of a combination of their medical problems and because of inability to afford it. Since January they are starting to get covered. Others have put it off, but over time a higher percentage will get coverage.

    Besides being better for the people involved, the ability of people to leave large companies and start their own companies should also strengthen the economy. There is no “blowtorch to the work force.”

    Insurance through the exchanges is not a “semi-public insurance system.” The exchanges are selling private health plans. The one difference is that insurance companies can no longer rip people off by selling plans which don’t cover them when sick–which was very common in the past.

    You are also totally wrong in your statement that it “still leaves tens of millions uncovered.” That was the old system, not the Affordable Care Act. Estimating that one million fewer will sign up the first year is trivial as most will sign up the next year. Plus this might not even be the fact once we see how many people sign up at the last minute. Besides, the important thing is not whether everyone is covered but that everyone who wants to obtain insurance coverage can do so. This is now the case, while it was not the case in the past.

  5. 5
    Ron Chusid says:

    In Congressional testimony the head of the Congressional Budget Office has said that the Affordable Care Act will reduce unemployment.

    The law helps millions of people (including myself, having to buy insurance on the individual market), many people I know personally (such as affluent friends whose spouses have had to work in jobs they otherwise don’t need purely so that they could obtain health insurance), and many patients who previously could not obtain insurance coverage.

    Beyond all these benefits, the law will reduce unemployment, boost the economy, and reduce the deficit. The conservative argument for repeal makes no sense, which is why Republicans are starting to back away from this ridiculous position.

    How can you support a position which will cause misery for millions of people, increase unemployment, harm the economy, and increase the deficit? Your position is not only based upon ignorance and dishonesty. It is outright evil.

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