Health-care law will prompt over 2 million to quit jobs or cut hours, a CBO report says
By Zachary A. Goldfarb and Amy Goldstein,
More than 2 million Americans who would otherwise rely on a job for health insurance will quit working, reduce their hours or stop looking for employment because of new health benefits available under the Affordable Care Act, congressional budget analysts said Tuesday.
The findings from the nonpartisan Congressional Budget Office revived a fierce debate about the impact President Obama’s signature health-care program will have on the U.S. economy.
The White House scrambled to defend the law, which has bedeviled Obama since its 2010 passage, arguing that the report shows it will work as planned, freeing people to care for their children, retire early or start their own businesses without worrying about health coverage.
“The Affordable Care Act today, right now, is helping labor markets, is helping businesses and is helping jobs,” said Jason Furman, the president’s chief economist.
But Republicans hailed the report as fresh evidence that the law will decimate the American workforce, encouraging people to forgo private employment in favor of taxpayer handouts.
“Today’s CBO report gives a sobering outlook on our economy,” Sen. Bob Corker (R-Tenn.) said in a statement. “It confirms what we’ve known all along: The health care law is having a tremendously negative impact on economic growth.”
The report raises new questions about the health-care law just as some Republicans are again looking for concessions related to the Affordable Care Act in exchange for an agreement to raise the federal debt limit. Treasury Secretary Jack Lew has urged quick action on the debt limit — with no concessions or negotiations — saying he could run out of cash to pay the nation’s bills by the end of this month.
Meanwhile, the health-care law promises to be a major issue in midterm congressional elections this fall, with Republicans looking to bludgeon Democrats over the program’s botched launch and Democrats hoping to highlight the millions of Americans who have gained coverage.
On Tuesday, few Democrats publicly defended the law, a sign that lawmakers recognize its vulnerability. In its report, the CBO said severe technical problems during the October rollout of the HealthCare.gov Web site will sharply curtail enrollment this year.
In its assessment of the law’s impact on the job market, the agency had bad news for both political parties. In an implicit rebuke of GOP talking points, the CBO said that there was little evidence the health-care law is affecting employment and that businesses are not expected to significantly reduce head count or hours as a result of the law.
But the report also contained a setback for the White House. The CBO predicts that the economy will have the equivalent of 2.3 million fewer full-time workers by 2021 as a result of the law — nearly three times previous estimates.
After obtaining coverage under the health-care law, some workers will choose to forgo employment, the report said, while others will voluntarily reduce their hours. That is because insurance subsidies under the law become less generous as income rises, so workers will have less incentive to work more or at all.
The design of the subsidies — like many programs in the social safety net — represents “an implicit tax on additional work,” CBO Director Douglas Elmendorf said.
The CBO attributed the decline in workforce participation primarily to this effect. But there were other, less important causes, too, including the likelihood that some employers will cut people’s hours, hire fewer workers or offer lower wages to new workers to avoid or compensate for a new fine on employers that do not offer insurance to employees who work more than 30 hours a week.
While the CBO’s assessment of the law’s impact on the labor market generated the most political heat, budget analysts also provided significant updates on the Affordable Care Act’s effects on health coverage.
The agency predicted that 6 million Americans will have bought private health plans through the new insurance exchanges by the March 31 deadline for obtaining coverage this year, while 8 million low-income people will have enrolled in Medicaid. Both figures are off by 1 million people compared with previous CBO forecasts.
But enrollment will pick up within a few years, the CBO said, forecasting that enrollment in the marketplaces’ health plans will eventually hover between 24 million and 25 million, while 12 million to 13 million people will be covered through Medicaid and CHIP, the Children’s Health Insurance Program.
Despite the glitches, the CBO said, 86 percent of American citizens and legal residents younger than 65 will have health insurance this year, up from 82 percent in 2013. And that figure is expected to continue rising, topping out at 92 percent in 2017.
The Obama administration has not produced its own enrollment forecasts for coverage under the law, one of the president’s main domestic achievements. But internally and in public forums, the administration’s top health officials have for months been using the 7 million estimate that the CBO issued in May.
Asked Tuesday whether it was a problem that fewer people are now expected to have insurance this year, White House press secretary Jay Carney did not answer directly but said, “We’re confident we’re going to have a substantial number of Americans covered both through the exchanges and through expansion of Medicaid.”
Given the hardware and software defects in HealthCare.gov that thwarted many consumers who tried to sign up this fall, Carney said, the impact on enrollment is “certainly not as severe as a lot of our critics hoped and expected.”
On Jan. 24, Health and Human Services Secretary Kathleen Sebelius announced that about 3 million people had signed up for private health plans through the federal and state exchanges. The number who have enrolled is not the same as the number who have become insured; people are covered once they pay their first month’s premium, and administration officials have declined to say how many have paid.