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Flash! CBO director says Obamacare will reduce unemployment, not increase it

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Greg Sargent EXPLAINS:

As noted here yesterday, Republicans went mad with glee at the new Congressional Budget Office report on deficits and the Affordable Care Act, with multiple GOP officials claiming it showed the law will kill over two million jobs. That was false.

Under questioning today before the House Budget Committee from Dem Rep. Chris Van Hollen, CBO director Douglas Elmendorf confirmed that in reality, his report suggests Obamacare will reduce unemployment.

The CBO report found that Obamacare — through subsidizing health coverage – would reduce the amount of hours workers choose to work, to the equivalent of 2.5 million full-time workers over 10 years. This was widely spun by Republicans as a loss of 2.5 million jobs.

To counter this, Van Hollen cited the report’s findings on Obamacare’s impact on labor demand, rather than supply. On page 124, the report estimates that the ACA will “boost overall demand for goods and services over the next few years because the people who will benefit from the expansion of Medicaid and from access to the exchange subsidies are predominantly in lower-income households and thus are likely to spend a considerable fraction of their additional resources on goods and services.” This, the report says, “will in turn boost demand for labor over the next few years.”

“When you boost demand for labor in this kind of economy, you actually reduce the unemployment rate, because those people who are looking for work can find more work, right?” Van Hollen asked Elmendorf.

“Yes, that’s right,” Elmendorf said.

Elmendorf added that the factor Van Hollen had identified was something CBO thinks “spurs employment and would reduce unemployment over the next few years.”

So there it is: The CBO report found the opposite of what some foes of the law claimed.

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2 Comments

  1. I’m sorry. I know the CBO does it’s best not be partisan, but this makes no sense.

    How are lower income households that are working fewer hours going to get “additional resources on goods and services?”

    If people are working less, they have less money. Less money held by the people means less money going into the economy. That is economics 101. That’s why Republicans push for tax cuts and Democrats push spending…to give people more money. And now the CBO says people having less money is going to help the economy? Really?

  2. One of the clinics in our health cares system laid off 4 employees today as a direct result of the ACA. I am sure they will be happy to hear this great news.

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