CBO: Obamacare Costs Jobs – Not!
Read all about it!
Fox News: “ObamaCare could lead to loss of nearly 2.5 million US jobs report says.”
Washington Times: “Obamacare will push 2 million workers out of labor market …”
The Hill: “O-Care will cost 2.5 million workers by 2024”
And these are just a sampling.
This hyperventilation by our right wing media, picked up and amplified by Republican leadership, was triggered by a report issued by the Congressional Budget Office, our official impartial score keeper of all things policy related. I pity the poor CBO sometimes, wading as they do into our political quagmire. Still someone has to give us the bad news and rather them than me.
How bad was the news?
Well. It was good.
Yes, that’s right. The bad news was actually good. You see the review of the impact of Obamacare on the economy was an ancillary aspect of a much larger review of the economy and Federal budget outlook. In two appendices – Appendices B and C to be exact – the CBO gives us an insight into how they treat the impact of health care reform within the many moving parts of the economy over the next ten years. Here’s the paragraph that has everyone so exercised:
“The reduction in CBO’s projections of hours worked represents a decline in the number of full-time-equivalent workers of about 2.0 million in 2017, rising to about 2.5 million in 2024. Although CBO projects that total employment (and compensation) will increase over the coming decade, that increase will be smaller than it would have been in the absence of the ACA. The decline in full- time-equivalent employment stemming from the ACA will consist of some people not being employed at all and other people working fewer hours; however, CBO has not tried to quantify those two components of the overall effect. 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 businesses’ demand for labor, so it will appear almost entirely as a reduction in labor force participation and in hours worked relative to what would have occurred otherwise rather than as an increase in unemployment (that is, more workers seeking but not finding jobs) or underemployment (such as part-time workers who would prefer to work more hours per week). “
Read that closely and you see something somewhat different from what you read in the media. I highlighted the relevant sentence.
First, the drop in jobs is actually a drop in total work hours translated into an equivalent number of full time jobs to make it easier to comprehend. Second, that drop is seen as entirely voluntary.
This is not a loss of jobs due to employers firing or refusing to hire. It is a loss of work due to people deciding not to work or to work less.
Why would they do that? Simple: our labor market is distorted by it being the primary location for people to find health insurance. So there are a fair number of workers who would prefer not to work, or would like to work part time, but who work full time because they need to find health insurance. Often these are older workers who would like to retire but keep working because they have a health condition that prevents them getting health care insurance other than through an employer sponsored program. Once they can locate and pay for insurance outside of the workplace they stop working. So this is not a job killer, but a lifestyle enhancer. People will be better off.
Yes, there will be instances of people being forced to work less hours as unscrupulous employers evade the law, but the CBO is clear in its estimate. The preponderance of the lost work hours will come as people opt to stop working. It isn’t because they are being forced out.
Not that you would understand this from reading those headlines.
Better yet. As those workers leave the workforce, and because employers will still be looking to hire, the net effect will be a tighter labor market and, most likely, higher wages for those who stay employed. It will also have a net positive impact on the unemployment rate.
One more thing: already the Republicans have targeted a reform they want to make to the law. They want to get rid of the subsidy Obamacare gives to insurance companies to offset, temporarily, the possible skewed risk pool that might increase insurance losses above the premiums charged. This skew is given the rather arcane name of ‘risk corridors’ and was identified as a potential reason insurers would stay out of the insurance exchanges on which the law depends. Here’s the key sentence where the CBO talks about that subsidy:
“CBO now projects that, over the 2015–2024 period, risk corridor payments from the federal government to health insurers will total $8 bil- lion and the corresponding collections from insurers will amount to $16 billion, yielding net savings for the federal government of $8 billion.“
Yes, that’s right. According to the CBO, the government is making a profit of about $8 billion on the deal. It isn’t a subsidy at all. It is a source of revenue. Nonetheless the Republicans want to get rid of it. Presumably they want to make the deficit larger.
When you cut through all the nonsense and actually read the CBO report, it offers pretty good news for health care reform supporters. It’s costing us less than everyone thought; it will free some workers from the drudgery of having to work just to get health care; and it will provide lots of people with coverage that they would otherwise not have. The only downside is that all the negative press from the Republicans, and the deliberate stalling of its implementation in some ‘red’ states has cause fewer people to sign up than planned or hoped for.
Ultimately the law is a success, and is already beyond repeal. It is an example of how our toxic politics has mucked up the average person’s likely perceptions of reality, and, given those headlines, it is a shining example of how shallow and biased the media can be.
We aren’t being given the facts properly. How can we possibly vote sensibly?
