The Truth Behind the New CBO Report on Obamacare
A new report from the Congressional Budget Office predicts the ACA would have a “substantially larger” impact on the labor market than it had previously expected: The law would reduce the workforce in 2021 by the equivalent of 2.3 million full-time workers, well more than the 800,000 originally anticipated.
This will inevitably be a drag on economic growth, as more workers, particularly those with lower incomes, choose to limit their hours to avoid losing federal subsidies that Obamacare provides to help pay for health insurance and other healthcare costs. It should be noted that the CBO does not state that Obamacare will kill 2 million jobs, but rather that the number of work hours people choose to cut back on in order to maintain their federal subsidies could total up to the equivalent of 2 million jobs by 2021.
This report contrasts with an earlier blog that projected an increase in hiring due to Obamacare, as a result of health care providers requiring more nurse practitioners and physician assistants, and insurance companies requiring greater human resources departments to deal with compliance. However, it should be noted that these two reports are not mutually exclusive; it’s possible to have an increase in hiring within the health care industry while simultaneously seeing a reduction in the number of hours workers choose to work.
What’s interesting is that the CBO report also goes on to forecast the impact of Obamacare on production of goods and services, stating that the ACA will boost overall demand for goods and services over the next few years, resulting in an increase for labor demand, as outlined by Dem. Rep Chris Van Hollen below:
All in all, the CBO Budget and Economic Outlook report is likely to be used on both sides of this year’s congressional election battle, and we will continue to monitor the trends and forecasts in the labor market.
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