Obamacare may prompt people to work less, impact workforce

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WASHINGTON — Many workers may opt to work less to retain their eligibility for Medicaid or federal subsidies under Obamacare, a new report has found.

The Affordable Care Act could reduce the labor force by the equivalent of 2.5 million workers in 2024, according to the non-partisan Congressional Budget Office’s annual outlook.

That doesn’t mean employers will start swinging the ax or even that that many jobs will be lost, CBO says. Rather, more people will likely opt to reduce their hours, or leave the workforce entirely, so they stay under the income caps for Medicaid and federal subsidies.

“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,” the report says. Therefore, it will more likely show up as a decline in share of the population participating in the labor force and in hours worked, rather than in spikes in unemployment or underemployment.

While the CBO projects that the share of Americans in the labor force will decrease in coming years, Obamacare will not be the driving factor. A bigger reason is the aging of the nation. But Obamacare will contribute to this and to the economy falling “slightly short of its potential” between 2018 and 2024, according to the CBO.

Federal subsidies phase out after $46,000 for individuals and $94,200 for families of four for 2014. In states that opted to expand Medicaid, eligibility ends at just under $16,000 for a individual and $32,500 for a family of four. Therefore, the largest declines in work will probably occur among lower-wage workers, the agency says.

The CBO doesn’t let higher-wage workers or employers completely off the hook. Those whose earnings are more than $200,000 (or $250,000 for couples) will be subject to a 0.9 percentage point payroll tax, which could also prompt some to work less.

And, the report says the penalty employers face for not providing insurance, which ranges up to $3,000, will lower employment initially. Some businesses may decide to reduce their workforce to fewer than 50 full-timers or shift to more part-time workers so they don’t have to provide health insurance for their staff.

But that may not reduce the overall demand for labor, the report says.

The White House played up this aspect of the report, highlighting the CBO’s finding that there is “no compelling evidence that part-time employment has increased as a result of the ACA.”

The Obama administration also pointed to the CBO finding that Americans’ new ability to get health insurance not tied to their jobs will give them more freedom and flexibility.

“CBO finds that because of this law, individuals will be empowered to make choices about their own lives and livelihoods, like retiring on time rather than working into their elderly years or choosing to spend more time with their families,” said the statement.

The CBO report also lowered the number of people it expects to sign up for private insurance through the state and federal exchanges in 2014 to 6 million, down from 7 million. But it still expects 24 million to enroll by 2017. The agency also expects 8 million to enroll in Medicaid this year, rather than 9 million, but retained its projection for 12 million to join the public health program by 2017.

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10 comments

  • Jeff Bender

    As usual Mr. O’blamo is putting the burden on the middle class. Since he is not a licensed health insurance agent, it is against the law to sell insurance in our state. Since he is not a licensed insurance agent in any state, he cannot sell insurance anywhere, and the insurance industry should take corrective action, including but not limited to fines and jail time. SInce everyone else that sells insurance without a license gets jailed why not O’blamo. ITS THE LAW and he of all people should take that in the highest regard!

  • D.R. Commish

    Less People working… More of the population without health insurance than before the “law” was passed…. Trillion’s of dollars spent that we don’t have…. 3 years and 6 million dollars wasted on a “website” that doesn’t work… the destruction of the world’s finest health care…. Lies from the president that you could “keep your plan, period”, and you can “keep your doctor, period.”….

    And the Media is silent.

    Is their still anyone, besides those with the president’s gift of lawless exemptions, that still thinks that Obamacare will be of any benefit?

    • D.R. Commish

      “Nick” must live in Bizarro World…. CNN is nearly as far from “Right Wing” as you can get……
      More like “Super Spin Lefty” Headline… The fine art of taking the destructive truth about an event, and making it sound like its free candy…. WooHoo!

  • Sumting Wong

    If you’re an illegal, or broke and homeless, you get a cadillac plan for $5/mo (five dollars a month), with zero deductable that covers pregnancy, drug rehab and cosmetic surgery. Welcome to the new age.

  • Tom Sanders

    That’s great…….the more people in poverty., starving, having no health insurance..more crime…is great…nothing does my heart more good than seeing stupid ignorant people suffer.

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