The non-partisan Congressional Budget Office gave new fuel to the debate over the Affordable Care Act Tuesday with its estimate that the law will lead to the eventual loss of about 2.5 million full-time jobs.
Chairman of the Council of Economic Advisers Jason Furman reacts to a Congressional Budget Office report on the estimated impact of the Affordable Care Act on the U.S. labor market.
In its annual budget and economic forecast the agency also said that the ACA or Obamacare will reduce the total number of hours worked by about 1.5 percent to 2 percent from 2017 to 2024.
Even though total employment will increase over the coming decade, the CBO said, “that increase will be smaller than it would have been in the absence of the ACA.”
CBO director Douglas Elmendorf told reporters that the analysis done by his agency’s experts “led us to conclude that the effect of the Affordable Care Act on labor supply would be a good deal larger than we had thought originally.” In 2011, the CBO estimated the loss of full-time equivalent jobs due to the law would be about 800,000.
Elmendorf also told reporters that the employer mandate – the requirement that firms offer health insurance to workers– “will reduce the demand for labor in the short term because employers face this extra cost. It is analogous in some ways to raising the minimum wage.”
The CBO report said that “workers will choose to supply less labor—given the new taxes and other incentives they will face and the financial benefits some will receive.”
Both sides of the Obamacare debate used the new findings to buttress their arguments, with House Speaker John Boehner saying that Republicans had argued for years that “the president's health care law creates uncertainty for small businesses, hurts take-home pay, and makes it harder to invest in new workers. The middle class is getting squeezed in this economy, and this CBO report confirms that Obamacare is making it worse.”
But Obama spokesman Jay Carney said the CBO analysis was incomplete. The budget office, he said, did not take into account the beneficial effect of slower health care cost growth due to the ACA, “Experts have estimated that slower growth in health costs due to the ACA will cause the economy to add an additional 250,000 to 400,000 jobs per year by the end of the decade,” he said. “Moreover, CBO does not take into account positive impacts on worker productivity due to the ACA's role in improving workers' health, including reduced absenteeism.”