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THE CBO REPORT THAT BLEW UP THE INTERNET - Twitter exploded yesterday following the release of the Congressional Budget Office report claiming that the Affordable Care Act will likely cause "a decline in the number of full-time-equivalent workers of about 2.0 million in 2017, rising to about 2.5 million in 2024." The report also said that while "total employment (and compensation) will increase over the coming decade, that increase will be smaller than it would have been in the absence of the ACA." Conservatives used the report to reassert that Obamacare is a "jobs killer." The administration fired back that it's not "jobs" being eliminated but instead workers choosing not to work or work less because they now have access to cheaper (often subsidized) health care coverage.
The administration correctly noted that the CBO report also found that there is little evidence (yet) to suggest that the ACA is currently causing a rise in part-time work as employers seek to avoid having to cover full-time workers. They also touted other economic benefits of the law such as the overall reduction in health care costs. But they did not really grapple with the fundamental point that CBO found that the law will discourage people who would otherwise work full-time from doing so and thus reduce overall economic activity.
You can argue that these people who opt out of full-time work will take care of children or aging parents or start new businesses. And "job lock" has indeed been a long-standing concern. But we don't really know what these people will do and whether it will ultimately benefit the economy (not that everyone agrees that boosting the economy should be the ultimate goal). And it's also not clear how you continue to pay for an expanded government benefit with a shrinking base of taxpayers.
M.M. asked CEA Chair Jason Furman on Twitter whether he thought CBO's assessment on the impact on the number of full-time workers was concerning. His response: "Many effects in ACA, I think slowing health costs is most important and is good for labor market."
Source: POLITICO By Ben White