Healthcare Law costs 2.3 million jobs by 2021, according to CBO Report

The Congressional Budget Office (CBO) released a report this week that analyzed the impact of the new health care law on the labor force. As we know from reading Red Ink, the CBO produces non-partisan reports every January that show where the nation is headed fiscally. Remember Doug Elmendorf, the director of the CBO? This January, Elmendorf and the CBO projected that the new health care law is going to reduce how much Americans work by 2.3 million full-time jobs by the year 2021. With the installation of the Affordable Care Act, individuals can to work fewer hours or not at all and still retain the same amount of coverage of healthcare. The CBO believes that this is enough of an incentive for the U.S. labor force to lose 2.3 million jobs within seven years. The original estimate from the CBO in 2011 was only a loss of 800,000 full-time jobs. While some individuals may stop working all together, those who are still working would just be working less. The unemployment rate shouldn’t increase as a result of the Act, says the CBO. However, working less would lower economic growth, especially if working less meant losing 2.3 million jobs. The CBO released the report about a very fiery issue that has split the political sphere since Obama first proposed the new healthcare plan. In the typical non-partisan style of the CBO, critics and defenders of the Affordable Care Act are using the CBO report to justify their own positions. Republicans are waving the headlines of the report around to attack the healthcare law as an impediment to the improving economy. The US economy cannot sustain a loss of 2.3 million jobs and continue to improve as it appears to be doing. Also, benefits under the ACA diminish as income rises. This gives incentive for individuals to work less as well. However, Republicans may not be looking at the fine print of the numbers. The ACA allows individuals to make decisions that they may not have been able to make before the ACA. If they are still going to get covered, they may work less or pursue their own business enterprise. With an individual working fewer hours, productivity could actually increase with the ACA, some believe. Many will stop working and still receive benefits. This means that these individuals leave the labor force and allow their former jobs to be occupied by somebody looking for a job, thus reducing the unemployment rate. While the predictions of the CBO are very straightforward, the economic impact is not. The economy could go either direction with the implementation of the ACA. However, it may be premature to assume that the economy will suffer the economic loss of 2.3 million jobs without any positive ramifications of increased job opportunities or the improved lifestyles of individuals. Wilson Hallett http://thehill.com/blogs/on-the-money/budget/197365-cbo-o-care-slowing-growth http://www.politico.com/story/2014/02/obamacare-first-year-enrollment-numbers-103098.html http://www.washingtonpost.com/business/economy/cbo-botched-health-care-law-rollout-will-reduce-signups-by-1-million-people/2014/02/04/c78577d0-8dac-11e3-98ab-fe5228217bd1_story.html http://www.cnbc.com/id/101352868