‘Obamacare’ will reduce US workforce, report finds

Daily News Article   —   Posted on February 6, 2014

image1274(from BBC News) – President Barack Obama’s health law will cut the US workforce by the equivalent of more than two million workers, the Congressional Budget Office (CBO) said in a report released Tuesday. The reductions will begin in 2017 after the law’s provisions take full effect the CBS said in its report.

Lower-income workers will be hardest hit because they will limit their hours to avoid losing federal subsidies or tax advantages under the law, the report said.  [“The estimated reduction stems almost entirely from a net decline in the amount of labor that workers choose to supply, rather than from a net drop in business’ demand for labor,” the CBO report said.]

In Tuesday’s report, the nonpartisan CBO said work hours would be reduced by the equivalent of 2.3 million full-time workers by 2021. It had previously estimated the health law would result in 800,000 fewer workers.

The Patient Protection and Affordable Care Act, commonly known as Obamacare, will result in a slower rate of employment growth over the next decade, according to the findings.

The congressional analysts say there will be fewer workers because healthcare subsidies would “reduce incentives to work” and pose an “implicit tax on working” for those returning to a job with health insurance.

The CBO said some US businesses may also decide to reduce their workforce to fewer than 50 full-time employees to avoid having to provide health insurance as mandated [required] under the law.

The report also found US workers nearing retirement may opt to work shorter hours to retain healthcare subsidies until they qualify for Medicare, a federal health program for senior citizens.

Employees may also face lower wages due to tax levees and penalties against their employers, the report found.

The CBO findings provided fodder for conservatives, who are expected to make the health law a major issue in November’s midterm elections. …

But the White House said the impact on the workforce would be due to voluntary steps by workers rather than businesses cutting jobs.

The law will leave people “empowered to make choices about their own lives and livelihoods,” said White House Press Secretary Jay Carney.  He added that the law would allow participants the freedom to retire early or become stay-at-home parents. …

The president’s Democratic allies have been trying to distance themselves from the issue in the lead-up to November’s elections.

Those elections will determine which political party holds sway in Congress for the final two years of President Obama’s presidency.

Republicans say the law, America’s most sweeping social legislation in decades, is an unacceptable government intrusion into healthcare. They have voted to repeal the act more than 40 times.

A Gallup poll on Tuesday found Americans continue to be more likely to disapprove of the law, by 51% to 41%.

Reprinted here for educational purposes only. May not be reproduced on other websites without permission from the BBC. Visit the website at bbc.co.uk.



Background

NOTE:

  • The CBO is not saying employers will fire millions of workers because of the law.
  • It instead found that the healthcare law will create disincentives for people to work and that this in turn will cut into the labor supply, hurt the economy, lower tax collection and cause higher deficits.
  • Some people will leave the workforce or reduce their hours in response to lower wages because of the healthcare law, while others will leave or reduce their hours because they have insurance coverage and do not need to work full time to keep it, the CBO said.
  • “All our analysis led us to conclude the effects of the [healthcare law] on labor force participation would be [much] larger than we had thought originally,” CBO Director Doug Elmendorf said. “Fundamentally, the Affordable Care Act provides subsidies to lower income people and those subsidies phase out ... that will have some effects on discouraging labor supply.” (from a report at thehill .com)