Here we go again. The Congressional Budget Office is reaffirming a forecast it made two years ago that the Patient Protection and Affordable Care Act will cost the United States 2 million jobs over the next decade.
The PPACA, writes the CBO, "will make the labor supply, measured as the total compensation paid to workers, 0.86 percent smaller in 2025 than it would have been in the absence of that law."
At first glance, that seems to play perfectly into the rhetoric of PPACA opponents, who have long referred to the landmark health law as a "job-killer." Indeed, Sen. Orrin Hatch, R-Utah, the chairman of the Senate Finance Committee, was quick to tout the report as evidence of the law's failure.
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"When the President's health law hurts the labor force at the same time it increases health care premiums and taxes, it's clear the law is not working for the American people," he told The Hill. "The CBO's latest report confirms yet another broken promise and negative consequence stemming from Obamacare."
Most of the work reduction the CBO is projecting does not imply more unemployment. The most significant effect of the law, it projects, is that expanded health care coverage will incentivize some people to leave the workforce.
Of the 0.86 percent reduction, 0.65 percent will come from the expansion of health care. The subsidies provided for people to buy insurance on the state and federal marketplace will have the biggest impact, accounting for 0.43 percent of the work decrease. Rules governing insurance, including prohibitions on denying coverage based on preexisting conditions, will also decrease work hours by 0.17 percent. The expansion of Medicaid will have a very small effect — only 0.05 percent.
The CBO does project some negative effects of the law on business, however. That's where the other 0.21 percent reduction in work hours comes in. The agency projects that employers subjected to the penalty for not providing insurance to workers will pass the cost on to their employees through lower wages. It also projects that there will be a negative impact from the Hospital Insurance Surtax, which will hit 8 percent of workers who account for 38 percent of the economy's overall earnings. These individuals' incomes will be reduced by 0.39 percent, leading to a 0.12 percent decline in labor.
PPACA advocates argue a shrinking workforce is a symptom of the law's success. Americans who would otherwise be tied to a job because they are unable to find health insurance on their own are now able to move freely in and out of the workforce, including to raise children.
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