2:10 PM
The Affordable Care Act will reduce the number of full-time workers by more than 2 million in coming years, congressional budget analysts said Tuesday, a finding that sent the White House scrambling to defend a law that has bedeviled President Obama for years.
After obtaining coverage through the health law, some workers may forgo employment, while others may reduce hours, according to a report by the Congressional Budget Office. Low-wage workers are the most likely to drop out of the workforce as a result of the law, it said. The CBO said the law’s impact on jobs mostly would be felt after 2016.
Republicans quickly pointed to the report’s findings as more evidence of the health law’s flaws, one of their major themes ahead of this year’s mid-term elections. Republicans see the Affordable Care Act as a political boon this year, after the disastrous launch of the law’s Web site last fall.
The CBO report said those rocky beginnings of the federal online marketplace would suppress enrollment this year, though not in the future. The agency predicted that the number of Americans who buy private health plans through the new insurance exchanges before a March 31 deadline for coverage in 2014 will be 6 million, while the number of low-income people who join Medicaid this year will be 8 million.
Both figures are one million fewer people than the CBO had forecast the last time it issued such a prediction, nine months ago.
The White House rushed to respond, insisting that the law will be positive for the economy and that any reduction in total workers will be far offset by the law’s benefits. It also stressed, as the CBO did, that the 2 million fewer workers reflect the equivalent of people dropping out of the labor force and cutting back on hours.
The CBO previously estimated that the economy would have 800,000 fewer jobs in 2021 as a result of the law. In that analysis, the CBO looked primarily at how employers would respond to a new penalty for failing to offer insurance to employees who work more than 30 hours a week. That response would include cutting people’s hours, hiring fewer workers and lowering wages for new jobs.
On Tuesday, the agency released a more detailed estimate that includes how ordinary Americans would react to those changes by employers. Some would choose to keep Medicaid rather than take a job at reduced wages. Others, who typically do not work full-time, would delay returning to work in order to keep subsidies for private insurance that are provided under the law.
As a result, by 2021, the number of full-time positions would be reduced by 2.3 million, the report said.
The reduction in employment from the health care law “includes some people choosing not to work at all and other people choosing to work fewer hours than they would have in the absence of the law,” the CBO said.
White House Press Secretary Jay Carney immediately pushed back against the estimate, saying in a statement, “Claims that the Affordable Care Act hurts jobs are simply belied by the facts in the CBO report.”
White House officials added that the CBO report also rebuts a key claim of Republicans — that the law has already had a significant impact on employment, including increasing the number of part-time workers.
Carney said: “CBO’s findings are not driven by an assumption that ACA will lead employers to eliminate jobs or reduce hours, in fact, the report itself says that there is ‘no compelling evidence that part-time employment has increased as a result of the ACA.’”
In its new analysis, the CBO said it had reduced its estimate of how many Americans would sign up for the insurance through the online marketplaces “in light of technical problems that impeded many people’s enrollment in exchanges in the first months of the open enrollment period.”
The CBO said that the program would catch up over time, with a total of 13 million Americans signing up in 2015 and 24 million by 2017.
Late last month, the Obama administration announced that about 3 million Americans had signed up for private health plans so far under the federal health exchange and separate exchanges that are being run by 14 states.
The administration and the CBO agree there should be a surge of sign-ups near the March deadline to apply for coverage in 2014.
The CBO estimated that 84 percent of the U.S. population would have health insurance in 2014, rising to 89 percent within a few years. Medicaid, the program for the poor expanded under the law, should add 6 million more people this year.
In his statement, Carney highlighted the more positive CBO findings about the health law’s impact. “What the CBO report does find is one key immediate effect of the Affordable Care Act is to ‘induce some employers to hire more workers or to increase the hours of current employees’ during the 2014-16 period,” the statement said.
At the same time, the CBO reported that the federal budget deficit is rapidly shrinking and is projected to narrow to $514 billion this year, providing fresh evidence that the problem that has been Washington’s obsession for the past several years has become far less urgent.
Tax increases, spending cuts and faster economic growth have helped close the deficit, which topped $1 trillion for several years following the onset of the Great Recession.
The budget deficit would equal 3 percent of the total size of the nation’s economy this year — what many economists see as a healthy level. The deficit is expected to decrease to $478 billion next year, or 2.6 percent of the size of the economy.
One of the more troubling aspects of the CBO report was its assessment of long-term economic growth.
The CBO said that the economy will continue to enjoy a solid recovery for the next several years, but will slow to a pace of expansion of 2.2 percent a year from 2018 to 2024.
Much of the slowdown has to do with fewer workers active in the economy — mainly a result of baby boomers retiring.
The slow growth the economy will reduce taxes by $1.4 trillion of the next years, leading to a wider than expected deficit by 2024 $1.07 trillion, or 4 percent of the size of the economy.
The CBO said it would still take until 2017 for the unemployment rate, currently at 6.7 percent, to fall to 5.8 percent, and may not reach 5.5 percent until 2024.
Today, the agency said the economy is about six million jobs short of where it should be.
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