The CBO did not — repeat: did not — say Obamacare will kill two million jobs


Michael Hiltzik NAILS IT:

The Congressional Budget Office is out with its latest report on the Affordable Care Act, and here are a few bottom lines:

— The ACA is cheaper than it expected.

— It will “markedly increase” the number of Americans with health insurance.

— The risk-adjustment provisions, which Congressional Republicans want to overturn as a “bailout” of the insurance industry, will actually turn a profit to the U.S. Treasury.

Given all this, why are the first news headlines on the CBO report depicting it as calling Obamacare a job killer?

You can chalk up some of that to the crudity of headline-writing, and some to basic innumeracy in the press. But it’s important to examine what the CBO actually says about the ACA’s impact on the labor market.

The CBO projects that the act will reduce the supply of labor, not the availability of jobs. There’s a big difference. In fact, it suggests that aggregate demand for labor (that is, the number of jobs) will increase, not decrease; but that many workers or would-be workers will be prompted by the ACA to leave the labor force, many of them voluntarily.

As economist Dean Baker points out, this is, in fact, a beneficial effect of the law, and a sign that it will achieve an important goal. It helps “older workers with serious health conditions who are working now because this is the only way to get health insurance. And (one for the family-values crowd) many young mothers who return to work earlier than they would like because they need health insurance. This is a huge plus.”

The ACA will reduce the total hours worked by about 1.5% to 2% in 2017 to 2024, the CBO forecasts, “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.”  That translates into about 2.5 million full-time equivalents by 2024 — not the number of workers, because some will reduce their number of hours worked rather than leaving the workforce entirely.

The overall impact on the community will be muted, moreover, because most of that effect will be seen at the lowest levels of the wage-earning scale. The effect will be “small or negligible for most categories of workers,” the CBO says, because there will be almost no impact on workers who get their insurance from their employers or who earn more than 400% of the federal poverty line (for a family of three, that’s $78,120), the point at which eligibility for federal premium disappears.



  1. So ObamaCare will cause over 2 million people to either voluntarily leaves their jobs or work less hours in order to receive health insurance subsidies.

    In other words, millions more people will be working less, thereby earning less money. Thus, they will be spending less money. How is that good for the economy again? Further, since people will in fact be more poor because of the law, then that will increase the spread of income inequality.

    So in other words, the number one liberal crying mantra is inequality, but their own signature law is making things worse!! Stupid liberals.

  2. Neftali: Congratulations! You’ve got the whole thing entirely wrong. Obamacare will not “cause over 2 million people to either voluntarily leave their jobs or work less hours in order to receive health insurance subsidies.” Rather,it will give them the option of doing so, if they choose, without losing their insurance.

    The New York Times explains 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 CBO 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.”

  3. CBO budget Chief Douglas Elmendorf just testified today that ObamaCare “creates a disincentive for people to work.”

    Ryan clarified that the CBO report found not that employers would lay people off, but that more individuals would choose not to work.

    “As a result … that [lower] labor supply lowers economic growth,” [Paul]Ryan said.

    Elmendorf answered: “Yes, that’s right.”

    Ryan fumed that this would mean fewer people would be “joining the middle class.”

    “It’s adding insult to injury,” he said. “As the welfare state expands, the incentive to work declines — meaning grow the government, you shrink the economy.”


    Only in backwards liberal loony-land can you spin this as something “good.”

  4. Neftali: You and Fox News and Paul Ryan still don’t get it. The so-called “disincentive to work” means that people who don’t want to stay in their current jobs just for the insurance will now have the choice — repeat: choice — of retiring or pursuing some other interests. The job market won’t shrink. Rather, the labor market will. That will mean fewer people chasing more jobs.

  5. Paul Waldman puts it this way: “The important thing to understand about the reduction in the labor force is that this is exactly what was supposed to happen. When you eliminate ‘job lock,’ where people who’d like to leave their jobs can’t because if they do they won’t have health insurance, a certain number of people are going to take advantage of their newfound mobility. In some cases you might be able to construe it as a loss to the economy, say if a productive full-time worker cuts back to part time because she can. But in many cases it’s something to celebrate: an American exercising their freedom.”

    And Matt Yglesias puts it this way: “Obamacare will kill jobs in the same way that Social Security kills jobs. By making it easier for people in certain circumstances to get by without a job…[W]e’re talking about people quitting not about people getting fired.”

  6. Ah…so more people on welfare chewing up our tax dollars. That sounds nice. I’m glad they have to freedom to do whatever they want while everyone else works for a living supporting them. Just think of how much society will benefit now that artists and hipsters are no longer constrained by “having to work.” We better tax the rich more so they can support their lifestyles.

    There’s simply no other way around it. 2 million people no longer working is simply not good for the economy. Period.

  7. I just had to visit Applesuace headquarters today to see the liberal spin machine in action.

    You might want to try and spin this topic too Patty. This is going to be an ever visible problem in 2014.


    After overcoming website glitches and long waits to get Obamacare, some patients are now running into frustrating new roadblocks at the doctor’s office.

    A month into the most sweeping changes to healthcare in half a century, people are having trouble finding doctors at all, getting faulty information on which ones are covered and receiving little help from insurers swamped by new business.

    Experts have warned for months that the logjam was inevitable. But the extent of the problems is taking by surprise many patients — and even doctors — as frustrations mount.

    Aliso Viejo resident Danielle Nelson said Anthem Blue Cross promised half a dozen times that her oncologists would be covered under her new policy. She was diagnosed last year with non-Hodgkin’s lymphoma and discovered a suspicious lump near her jaw in early January.

    But when she went to her oncologist’s office, she promptly encountered a bright orange sign saying that Covered California plans are not accepted.

    “I’m a complete fan of the Affordable Care Act, but now I can’t sleep at night,” Nelson said. “I can’t imagine this is how President Obama wanted it to happen.”

    To hold down premiums under the healthcare law, major insurers have sharply cut the number of doctors and hospitals available to patients in the state’s new health insurance market.

    Now those limited options are becoming clearer, and California officials say they are receiving more consumer complaints about access to medical providers. State lawmakers are also moving swiftly to ease some of the problems that have arisen.

  8. Neftali: Give it up. You were wrong on this matter from the get-go, and now you’re just digging a deeper hole.

    A decline in unemployment is always better than an increase.

    Read this: http://blogs.e-rockford.com/applesauce/2014/02/05/flash-cbo-director-says-obamacare-will-reduce-unemployment-not-increase-it/#axzz2sTYfMd6o

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