The CBO Report On The Success Of The Affordable Care Act

The Congressional Budget Office report released yesterday showed that the Affordable Care Act is getting off to a tremendous success despite the early computer problems in the exchanges. The report showed that millions of additional people are receiving coverage, the law results in a reduction in the deficit, and frees workers from the “insurance trap.”

The report also turned out to be both a test of the understanding of health care policy by reporters and of the dishonesty of conservative news sources. Health care policy is quite complicated and it is not unusual for reporters to make mistakes in the coverage of a report such as this. Many misunderstood the predictions of people leaving the work force leading to some rather untrue headlines yesterday. Needless to say, the conservative media continues to make the same false claims, ignoring the actual meaning of the CBO report, and will continue to spread this misinformation.

I was pleased to see  Glenn Kessler of The Washington Post, who has made some major mistakes on health care policy coverage in the past, got it right on this one.  His fact-checker article was entitled “No, CBO did not say Obamacare will kill 2 million jobs”. I think it helped that he specifically wrote about what the CBO report really said, as opposed to getting into the more complicated details of health care policy. Kessler concluded with saying, “we award Three Pinocchios to anyone who deliberately gets this wrong.”

The word deliberately is important as unfortunately some people are going to be misled by the initial incorrect headlines and by the conservative media which will continue to make this false claim.  The reduction in employment described in the report is one of the positive aspects of the Affordable Care Act. Up until now, many people continued in jobs they did not want because they would be unable to obtain health insurance if they left their jobs.  I know affluent people whose spouses work purely for the health insurance as this was the only way they could obtain this. This change frees people in their 60’s to retire early if they choose. People who would prefer to change jobs will be able to do so without losing their insurance. People will also be able to start small businesses without losing health insurance, which will also probably turn out to be beneficial to the economy. The Robert Wood Johnson Foundation wrote about projections for an increase in entrepreneurship and self-employment last May. The CBO report confirms that they were correct.

On a related issue, the ability to keep affordable health insurance after losing a job means that people who develop a serious illness and become too sick to continue working will no longer lose their insurance. This was a common cause of bankruptcy in the past.

The New York Times looked at the benefits described by the CBO in an editorial today:

The report estimated that — thanks to an increase in insurance coverage under the act and the availability of subsidies to help pay the premiums — many workers who felt obliged to stay in a job that provided health benefits would now be able to leave those jobs or choose to work fewer hours than they otherwise would have. In other words, the report is about the choices workers can make when they are no longer tethered to an employer because of health benefits. The cumulative effect on the labor supply is the equivalent of 2.5 million fewer full-time workers by 2024.

Some workers may have had a pre-existing condition and will now be able to leave work because insurers must accept all applicants without regard to health status and charge premiums unrelated to health status. Some may have felt they needed to keep working to pay for health insurance, but now new government subsidies will help pay premiums, making it more possible for them to leave their jobs.

The report clearly stated that health reform would not produce an increase in unemployment (workers unable to find jobs) or underemployment (part-time workers who would prefer to work more hours per week). It also found “no compelling evidence” that, as of now, part-time employment has increased as a result of the reform law, a frequent claim of critics. Whether that will hold up after a mandate that requires employers to provide coverage, which was delayed until 2015, kicks in is uncertain.

The report also verified that millions more people will be covered by health insurance due to the Affordable Care Act:

Given the rocky start, 14 million additional Americans covered by insurance through the exchanges and Medicaid is sound progress; and the budget office projects a sharp increase in enrollment in 2015 and 2016 and a bigger net reduction in the number of uninsured. Its projections for subsequent years remain essentially unchanged. In 2017, it predicts 12 million more in Medicaid and 24 million more in private coverage through the exchanges.

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

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