No, the CBO Report Does Not Say that Obamacare Will Kill 2 Million Jobs

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There’s a lot of bad press going around about the latest CBO report.

Conservatives quickly jumped on it to report that Obamacare was going to kill 2 million jobs. But White House Press Secretary Jay Carney issued a statement noting, “Claims that the Affordable Care Act hurts jobs are simply belied by the facts in the CBO report. CBO’s findings are not driven by an assumption that ACA will lead employers to eliminate jobs or reduce hours, in fact, the report itself says that there is ‘no compelling evidence that part-time employment has increased as a result of the ACA.'”

Carney also pointed out that the private sector has added 8.1 million jobs since Obamacare.

So what gives?

Here’s an example of the report coverage from CNBC that demonstrates how easy it is to misunderstand this, “Obamacare will cause a larger-than-expected reduction in working hours—eliminating the equivalent of about 2.3 million workers in 2021. In 2011, the CBO estimated the law would cause a reduction of about 800,000 full-time equivalent workers.”

That sounds really bad. But note the use of the word “equivalent”.

From the CBO report (my bold):

“CBO estimates that the ACA will reduce the total number of hours worked, on net, by about 1.5 to 2 percent during the period from 2017 to 2024, almost entirely because workers will choose to supply less labor—given the new taxes and other incentives they will face and the financial benefits some will receive.

“The reduction in CBO’s projections of hours worked represents a decline in the number of full-time-equivalent workers of about 2.0 million in 2017, rising to about 2.5 million in 2024.”

Why won’t they be working? Why won’t these “equivalent” hours be working? Because the premiums will effectively increase household income and people won’t need to work full time in order to get health insurance.

This is known as freedom in some places, but apparently, it’s bad to let people make their own choices about how much they want to work. There are many people who work full time just for the insurance, but might rather be at home with their kids or retiring or any number of things. Somehow people not being desperate is a bad thing in GOP world.

Carney pointed out in his statement, “Since the Affordable Care Act passed into law in March 2010 the private sector has added 8.1 million jobs. That is the strongest 45 month job growth since the late 1990s and contrasts with the 3.8 million private sector jobs lost in the decade before the Affordable Care Act passed.”

The Press Secretary conceded, “What the CBO report does find is one key immediate effect of the Affordable Care Act is to “induce some employers to hire more workers or to increase the hours of current employees” during the 2014-16 period.” However, he points out, “Over the longer run, CBO finds that because of this law, individuals will be empowered to make choices about their own lives and livelihoods, like retiring on time rather than working into their elderly years or choosing to spend more time with their families.”

Carney pointed out that the CBO confirmed that this analysis of the implications of the ACA on the labor force is incomplete. “(It) does not take into account the impact that ACA’s slowing health care cost growth which experts have estimated that slower growth in health costs due to the ACA will cause the economy to add an additional 250,000 to 400,000 jobs per year by the end of the decade. Moreover, CBO does not take into account positive impacts on worker productivity due to the ACA’s role in improving workers’ health, including reduced absenteeism.”

As with any new big policy implementation, all is not perfect with Obamacare. Indeed, there are possible negative implications in the short term regarding reducing hours, though I certainly wouldn’t count people choosing to work less as a negative (anyone who suggests this hasn’t worked for health insurance before).

The question being investigated by the House today is will it encourage businesses to reduce employee hours to avoid the “employer mandate.” Democrat Sandy Levin disagreed with this critcism, explaining:

“The ACA’s use of a 30-hour standard to define full-time was set to minimize gamesmanship and incentives that might tempt some employers to reduce hours in order to avoid their responsibility to offer affordable coverage, or in order to help offset the “free rider” costs that would come about to public programs as their uninsured workers seek health insurance elsewhere.”

As Rep. Levin pointed out, it was drafted this way for a reason — as no matter how you do it, unless you use universal healthcare which would not have passed, some employers are going to try to get around the law in order to make more money. This is natural. Do Republicans have ideas for fixes to this that don’t undermine the entire purpose of the law? So far, all we’ve gotten from them are corporate give aways.

So the question is, does the impact of this nullify the benefits of the law?

With the private sector adding jobs, people who were denied access to healthcare finally getting it, the reduction in healthcare costs and the deficit, Obamacare has a lot of positives that far outweigh the jockeying of some employers. As for people working less, yes, they might be, per their own choice, because they finally have the freedom to choose not to work their fingers to the bone in order to have access to healthcare.

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