Obamacare Lost Jobs Will Be Due to Workers’ Choice, Not the Law Itself


Obamacare will cause America to lose 2.3 million full-time jobs in 2021, not because of the law itself, but due to workers choosing to work less or not at all.  A report released by the Congressional Budget Office found that the key reason for the job loss is that people will work fewer hours now that they can get health coverage with the Affordable Care Act.  In a prior report, the CBO had forecast that a much lower count of 800,000 workers would disappear from the labor force in 2021.

The loss in the labor force does not equate to a spike in the unemployment rate.  The loss of jobs are forecast to be a result of individuals’ choice to work less, such as a worker who was working only long enough to be eligible for Medicare who might now stop working earlier.  Other workers might work fewer hours in order to earn less money so that they could qualify for Medicaid, especially as some states are choosing to expand their Medicaid programs under the ACA.  Still other workers might work fewer hours in order to be eligible for the subsidies available for lower-income Americans under Obamacare.  For workers whose higher incomes meant higher tax rates in order to fund the law, the choice to work less and to therefore earn less might also seem attractive.

On the flip side, the ACA may mean that workers will no longer have to choose jobs based on the health care offered, but will take jobs based on their skills.  Also, it’s possible that some areas of the labor market could see an increase in jobs as more Americans find themselves with more disposable income because they are not paying as much for medical costs.

Regarding the jobs lost due to Obamacare, the agency also found that the parts of the law that propel people to choose to reduce their work hours will be of a higher impact than that of people who might lose their jobs or have their own hours reduced due to the law.  It is likely that some employers will reduce hours, lower starting wages or do less hiring in order to either prevent or make up for any fine they may incur under the law if they do not offer insurance plans to employees working more than 30 hours per week.

The report also says that it is expected that some unemployed Americans would pick up the hours that are being given up voluntarily.  In addition, the agency found that premiums for the health care plans available on the exchanges were 15 percent lower than what had been projected.  The CBO also pointed to a recent slowing in the growth of Medicare costs, projecting that the “growth will be slower than usual for some years to come.”

A previous estimate on the impact of a provision in the ACA regarding what is being termed “risk corridors” has been revised in the new report.  The provision allows the government to collect money from insurance companies that end up with less costs due to a healthier-than-expected pool of insured persons and redistribute it to those with less-healthy pools.  Although the CBO had said that the risk corridors would not help to save the government money, it now estimates that $8 billion could be collected.  Addressing the federal deficit, and the impact the ACA will have on it, the CBO found that although a large decrease from as high as $1 trillion yearly during the recession to $514 billion will be seen, a smaller workforce and the retirement of baby boomers will mean less money from taxes and an increase in the deficit.

The CBO did allow that it is possible for the impact of the ACA on the job market to vary based on enrollment levels for the ACA and the rate at which the unemployment rate falls.  The agency found little evidence to say that the ACA will affect the employment rate nor are companies projected to reduce their workforce by people or hours because of it.  Most jobs that will be lost due to Obamacare will be a direct result of the worker choosing to reduce hours or stop working altogether and not due to the secondary effects of having the law in place.

By Jennifer Pfalz


Wall Street Journal
Washington Post
New York Daily News

One Response to "Obamacare Lost Jobs Will Be Due to Workers’ Choice, Not the Law Itself"

  1. chuck   February 4, 2014 at 7:32 pm

    How is a person’s opinion of what “workers MIGHT do” news???

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