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Health law will prompt some to work less, report says

Wed., Feb. 5, 2014, midnight

WASHINGTON – President Barack Obama’s health care law will reduce the ranks of the uninsured by roughly 13 million this year and 25 million once it is fully phased in, but will prompt some people to work less because of the availability of insurance subsidies, the Congressional Budget Office said Tuesday.

The latest projections by the nonpartisan budget analysts inspired new talking points for both sides in the deeply polarized debate over the Affordable Care Act, popularly known as Obamacare.

Republicans seized on the projected reduction in work hours – roughly a 1.5 percent to 2 percent decline, or the equivalent of 2 million full-time jobs – to boost their claim that the law will harm the economy.

Democrats countered that the reduction in hours would be largely voluntary. They pointed to another section of the report which forecast that a provision Republicans have denounced as a taxpayer “bailout” of insurance companies actually would save the government $8 billion over the next decade. The so-called risk-corridors provision is one of several in the law intended to equalize the risk that insurers face if they end up with a less healthy assortment of consumers.

Supporters of the law also noted that the CBO’s analysts found “no compelling evidence” to support the claim that the law had caused firms to replace full-time workers with part-timers to avoid providing health insurance.

On the other hand, the CBO also said it had not seen proof that Obamacare could be credited for the continuing decline in the inflation rate for health costs.

The projection that 13 million people will gain coverage under the law this year – about 6 million through buying insurance on the law’s online marketplaces and the rest through expansion of Medicaid – represents a decline from the CBO’s earlier forecasts. Before the botched rollout of the law in October and November, the CBO had projected that about 7 million people would sign up through the new websites.

By the end of Obama’s tenure, the CBO forecasts, the number of uninsured people in the U.S. will have been cut nearly in half.

The CBO’s projections about jobs sparked the most immediate controversy.

The report forecast a relatively small effect. For the next three years, there would be no change. Then, starting in 2017, the law will “reduce the total number of hours worked, almost entirely because workers will choose to supply less labor,” the CBO said.

In 2010, when the law passed, the CBO projected an effect about half as large.

Some workers who are eligible for subsidies to make insurance more affordable – which the law provides to families of four earning up to $94,000 a year – will find that the money “will reduce incentives to work,” the report said. A mother with small children, for example, might choose to work fewer hours if she finds she can afford health insurance more easily.

In a briefing for reporters, CBO Director Douglas Elmendorf said he wanted “to emphasize that that reduction doesn’t mean that that many people will choose to leave the labor force.”

Overall, the law probably will increase the number of jobs in the economy in the short term, Elmendorf said, adding that the precise effect is hard to estimate. Both the positive and negative effects on employment “mostly fade after a few years,” he added.


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