The new healthcare law will slow economic growth over the next decade, costing the nation about 2.5 million jobs and contributing to a $1 trillion increase in projected deficits, the Congressional Budget Office said in a report released Tuesday.
The non-partisan agency’s report found that the healthcare law’s negative effects on the economy will be “substantially larger” than what it had previously anticipated.
The CBO is now estimating that the law will reduce labor force compensation by 1 percent from 2017 to 2024, twice the reduction it previously had projected.
This will decrease the number of full-time equivalent jobs in 2021 by 2.3 million, it said. It had previously estimated the decrease would be 800,000.
It said this decrease would be caused partly be people leaving the workforce in response to lower jobs offered by employers, and increased insurance coverage through the healthcare law.
It also said employer penalties in the law will decrease wages, and that part-year workers will be slower to return to the work force because they will seek to retain ObamaCare insurance subsidies.
Some people at the lower end of the income scale will realize it makes more sense to collect ObamaCare subsidies than to knock themselves out with a 9-5. Later, earnest Dems can rail about how we are no longer an opportunity society and the working class is being left behind, so it's a win-win; from the CBO report:
However, people whose employment or hours worked will be most affected by the ACA are expected to have below-average earnings because the effects of the subsidies that are available through exchanges and of expanded Medicaid eligibility on the amount of labor supplied by lower-income people are likely to be greater than the effects of increased taxes on the amount of labor supplied by higher-income people.
That said, I did extract from the CBO report this about our drift towards becoming a part-time nation as the taxes and penalties ObamaCare imposes on full-time jobs kick in:
In CBO’s judgment, there is no compelling evidence that part-time employment has increased as a result of the ACA. On the one hand, there have been anecdotal reports of firms responding to the employer penalty by limiting workers’ hours, and the share of workers in parttime jobs has declined relatively slowly since the end of the recent recession. On the other hand, the share of workers in part-time jobs generally declines slowly after recessions, so whether that share would have declined more quickly during the past few years in the absence of the ACA is difficult to determine.21 In any event, because the employer penalty will not take effect until 2015, the current lack of direct evidence may not be very informative about the ultimate effects of the ACA.
Too soon to tell, and we may not know until after the election. Nervous Dems exhale!
HEADLINING AT A COMEDY CLUB: A paniced NY Times struggles with its coverage; they are running a correction which itself requires correction:
Correction: February 4, 2014
An earlier version of a headline accompanying this article on the home page was incorrect. The health law is projected to result in two million fewer workers, according to the Congressional Budget Office, not two million fewer jobs.
As best I can tell, this is the corrected home page headline:
Health Law Seen as Leading to 2 Million Fewer Workers
Wrong again. The CBO is projecting a loss of 2 million human-years of effort in 2017 (rising to 2.5 million by 2024). That comes from people spending more time on unemployment between jobs, retiring earlier, or working part-time instead of full-time. From the report on p. 127 (p. 133 .pdf):
CBO’s updated estimate of the decrease in hours worked translates to a reduction in full-time-equivalent employment of about 2.0 million in 2017, rising to about 2.5 million in 2024, compared with what would have occurred in the absence of the ACA.
The reduction in full-time-equivalent employment that CBO expects will arise from the ACA includes some people choosing not to work at all and other people choosing to work fewer hours than they would have in the absence of the law; however, CBO has not tried to quantify those two components of the overall effect.
Because some people will reduce the amount of hours they work rather than stopping work altogether, the number who will choose to leave employment because of the ACA in 2024 is likely to be substantially less than 2.5 million. At the same time, more than 2.5 million people are likely to reduce the amount of labor they choose to supply to some degree because of the ACA, even though many of them will not leave the labor force entirely.
That is "lost output" in the sense that the extra two miliion people-years of effort could have gone to useful gods and services. Instead, it is going to taxpayer-subsidized free time, which is not necessarily awful - maybe a parent can afford to take a part-time job and spend more time raising the kids. Well, maybe.
Also filed under "maybe" is whether the Times will eventually get this right. Maybe after they stop hyper-ventilating...
CORRECTING THE CORRECTION: The new, nimbler Times tries yet again:
Correction: February 4, 2014
An earlier version of a headline accompanying this article on the home page was incorrect. The health law is projected to result in a voluntary reduction in the work force equal to 2.5 million full-time workers, according to the Congressional Budget Office, not two million fewer jobs.
Well, OK then. Just for laughs, we should note tjhat they are now one step ahead of the Washington Post, which currently has this correction:
The headline of an earlier version of this story incorrectly stated the CBO study estimated that health law will result in 2 million fewer jobs. The CBO says the health law will lead to 2 million fewer workers.
Is the CBO report really this mysterious, or are these media elites just re-writing other people's coverage?