Posted 2 months ago on Feb. 4, 2014, 8:11 p.m. EST by Tanakasan
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The new healthcare law will cost the nation the equivalent of 2.5 million workers in the next decade, the Congressional Budget Office (CBO) estimated in a report released Tuesday.
The nonpartisan agency found the reform law’s negative effects on the economy would be “substantially larger” than what it had previously anticipated.
It said the equivalent of 2.3 million workers would be lost by 2021, compared to its previous estimate of 800,000, and that 2.5 million workers would be lost by 2024. It also projected that labor force compensation would be reduced by 1 percent from 2017 to 2024 — twice its previous estimate — and that declining economic growth would add $1 trillion more to deficits.
The findings immediately roiled the debate over the healthcare law on Capitol Hill ahead of this year’s midterm elections.
The White House swiftly pushed back against the findings, seeking to dismiss suggestions from Republicans that the Affordable Care Act has contributed to a slower economic recovery or would “kill” jobs.
It pointed out that the CBO concluded the reduction in worker hours was almost entirely because of workers choosing to work less.
“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.
Republicans seized on the analysis, arguing it is proof that the healthcare law will hold back the economy.
“This latest diagnosis from the nonpartisan CBO confirms what we have been saying all along — that the president’s health law is bad medicine for jobs and the economy,” said House Energy and Commerce Committee Chairman Fred Upton (R-Mich.).
“Washington can't continue to ignore the problem: trillions of dollars in empty promises. And ObamaCare is only making things worse,” said Rep. Paul Ryan (R-Wis.), the chairman of the House Budget Committee.
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 a good deal 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.”