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ObamaCare Clusterfuck: CBO says ObamaCare will mean the loss of 2 million full time jobs by 2021


After obtaining coverage through the health law, some workers may forgo employment, while others may reduce hours... 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.

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 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.

I'm of two minds about this.

First, in "Who gives a shit?" mode, I'm happy people won't be forced to work at crappy jobs just to keep their health insurance.

Second, I'm very sympathetic to the position that people should be able to "take it easy," as Jack Crow says. Who said the 40-hour week is sacred, anyhow?

But third (I lied about two) this looks like an open attempt to shrink the workforce still more, and if anybody can't see the "undeserving poor" narrative barrelling toward ObamaCare, here, have my binocular vision. This population is going to get written off, exactly as those whose unemployment insurance ran out got written off, and by both parties, too.

UPDATE Kevin Drum makes a good point:

Obamacare will reduce employment primarily because it's a means-tested welfare program, and means-tested programs always reduce employment among the poor.

If, for example, earning $100 in additional income means a $25 reduction in Obamacare subsidies, you're only getting $75 for your extra work. At the margins, some people will decide that's not worth it, so they'll forego working extra hours. That's the substitution effect. In addition, low-income workers covered by Obamacare will have lower medical bills. This makes them less desperate for additional money, and might also cause them to forego working extra hours. That's the income effect.

This is not something specific to Obamacare. It's a shortcoming in all means-tested welfare programs. It's basically Welfare 101, and in over half a century, no one has really figured out how to get around it. It's something you just have to accept if you support safety net programs for the poor.

It's worth noting, however, that health care is an exception to this rule. It doesn't have to be means tested. If we simply had a rational national health care system, available to everyone regardless of income, then none of this would be an issue.


Average: 5 (1 vote)


nihil obstet's picture
Submitted by nihil obstet on

when so many are badly employed. I would prefer a basic guaranteed income so that people could decide whether it's better to take a job or not. But here we're talking about the trade-off between different ways of getting crappy benefits. It's not like these are temporarily crappy jobs that will enable workers to advance to more interesting and lucrative positions. They're crappy permanent low-paid jobs. In our society, the poor are permanently undeserving, so I don't see how this changes anything.

Submitted by lambert on

It's an exit, voice, loyalty thing. People have no voice, the employers give them no reason to be loyal, so why shouldn't they exit?

However, this does change things, at least numerically. And it's also another one of those little signals that ObamaCare doesn't have much to do with care.

quixote's picture
Submitted by quixote on

I'd assumed this was going to be because CBO finally figured out that employers would be keeping workers below 30 hrs so they (the employers) weren't required to provide health insurance. But it sounds like this is their estimate of people who won't be working as much because they're not tied to a job for insurance. That's actually a good thing. Pretty much the first good side effect I've heard of out of this whole sorry mess.

The other group was people bumping up against that 400% of poverty cutoff for subsidies. For young healthy people it's not a huge cliff, but for older people with higher premiums it can be a difference of thousands of dollars because of a one dollar difference in income. Of course they're going to work less to make sure they don't hit the magic number.

Alexa's picture
Submitted by Alexa on

and I believe that I mentioned [last week] that the just signed (?) Farm Bill has a workfare provision--the first on a 'federal' level pertaining to SNAP, that I've ever heard of.

From WaPo "Post Politics":

The bill also for the first time establishes pilot programs to encourage food stamp recipients to seek jobs and bars USDA from using money to recruit new beneficiaries or to advertise the program on television, radio and billboards.

Addressing years of documented evidence of misuse and abuse of the program, USDA will need to ensure that illegal immigrants, lottery winners, college students and the dead cannot receive food stamps and that people cannot collect benefits in multiple states.

And from the NYT:

Senate Passes Long-Stalled Farm Bill, With Clear Winners and Losers

The nearly 1,000-page bill, which President Obama is to sign at Michigan State University on Friday, among other things expanded crop insurance for farmers by $7 billion over a decade and created new subsidies for rice and peanut growers that would kick in when prices drop.

But anti-hunger advocates said the bill would harm 850,000 American households, about 1.7 million people spread across 15 states, which would lose an average of $90 per month in benefits because of the cuts in the food stamp program.

“It’s absolutely devastating,” Ms. Wright said.

I saw a map of the 15 states--almost exclusively so-called "blue states."

How's that for a pre mid-term "gift?"

Pardon, got sidetracked--back to the ACA . . .

It would not surprise me if the 'individual mandate' was proposed and passed by Dems knowing (and counting on) subsidies being striped from the program (by Repubs).

Just watch, when it does happen, the Dems will stamp their feet and make a lot of racket--and then NOTHING!

OR, the PtB will make it a "prerequisite" [for the federal subsidy] that a beneficiary must work so many hours a week to qualify for a subsidy.

Otherwise, ACA beneficiaries are on their own in regards to paying their health insurance premiums. They'll be reminded that they can always settle for a bronze plan, if it best suits their pocketbook (or wallet).


BTW, this is not intended as snark.

As the DLC put it in their "Hyde Park Declaration":

We believe in a new social compact that requires and rewards work in exchange for public assistance and that ensures that no family with a full-time worker will live in poverty.


In the next decade, progressives should embrace an even more ambitious social goal -- helping every working family lift itself from poverty.

Our new social compact must reinforce work, responsibility, and family.

Bootstraps, anyone?

zot23's picture
Submitted by zot23 on

I just went through the exchange in CO to get a new plan (and some tax credits) for my family. Overall, a good experience and we will now have much better coverage. But of course, there are some rough patches and parts that should be reformed. This issue is one of them. It needs to be addressed, but after using the exchange I would say not to be too hasty to toss the baby with the bathwater just yet. The groundwork is there for tremendous benefit if we can adapt the ACA with a bit of skill.

Here's how I would solve this in a perfect world: Have a public option where participants "buy" into Medicare at whatever they can afford on the scale. So under the poverty line it is basically free. Above that, you can keep Medicare as a provider but it begins to "scale in" based on your income. This is how it works with the private plans and tax credits now, you don't have to switch plans as soon as you cross a threshold of income - you just pay a sliding share of the premium as your income increases. Why not include Medicare in this strategy?

Submitted by lambert on

... with Social Security as the "public option"?

* * *

As usual, I'm happy when somebody improves their situation, and ObamaCare was always bound to help some. I just think all deserve equal access to health care, and ObamaCare cannot deliver that, not ever.

Alexa's picture
Submitted by Alexa on

but there is one problem with what you suggest--a buy-in to Medicare, public option, etc.--does not look to be in the cards, anytime soon (IMO).

Today, FP Clinton will be addressing Democratic senators at a meeting or retreat (according to Julie Mason and reporters on TPP), and one of his main messages will be--"stand up and fight for the ACA."

So, I sort of figure that this toxic program is here to stay, at least in the near future. And even if it weren't, as has been documented here ad nauseum, Medicare is not exactly a 'silver bullet,' with its many deficiencies and gaps in coverage.

Bear in mind, unless one can afford $200-400 plus for a Medigap policy (over and above the approximately $108-109 for Medicare--2013), or a total of $300 to $500 a month per retiree, coverage for seniors is not that comprehensive under this program.

Democrats are proposing (it may be part of Bowles-Simpson) to attach a surtax to the Medicare premium of seniors with very comprehensive and/or first dollar Medigap insurance coverage. And this IS in PBO's 2014 Budget. I have seen figures of an additional 15%-30% (so I'll just quote the range) for the Medicare premium surcharge.

And that doesn't even account for the fact that prescription drug coverage requires YET ANOTHER insurance--Part D coverage. Factor in another $50 to $150 for that coverage.


Regarding the the ACA subsidies, just with the past week or two, several Republicans (including Tom Coburn) offered up a ACA "reform" package which calls for reducing the premium subsidy by setting the eligibility income at 300% FPL, instead of 400% FPL under current law. (My understanding is that the 'help' afforded those in the 300-400% bracket under the ACA is very scant--but there is at least some help, for now.)

BTW, I don't disagree with what proposal of what you'd like to see. I just believe that the ACA makes it much more unlikely, not more likely, that we will see the reform that you suggest.

It is good to see, with all the negative stories, someone who is going to benefit from this ill-conceived program!


Submitted by Dromaius on

Given that you're buying on the Exchange your "much better" coverage likely comes with a much narrower network than you had before if you had traditional insurance. Just so you know....

Rainbow Girl's picture
Submitted by Rainbow Girl on

... of the plan you were able to find in Colorado. If not, then kudos. But good to dig a bit to understand exactly what you're getting for your money.

As to making Medicare available on a means-tested basis, please no more. This is already how Medicare has been infested by rentier cost shifting to the point where the majority of Medicare beneficiaries can't afford Medicare. There's premiums, there's unlimited out of pocket for hospitals and doctors, there's increasingly narrower networks, no dental, no RX, and no protection for bankruptcy unless you can afford to buy the Medicare Supplemental plans (which are a giant captive market for rentier insurance companies - the main beneficiaries of the New NeoLiberal Medicare).

So let's please not propose the extension of the gutted Medicare as a "public option" to be offered on a sliding scale (it already is, to devastating human effect) to anyone under 55.

Medicare de facto no longer delivers what it was created to deliver -- affordable universal medical care to elderly Americans (and then persons who are younger but disabled). So it is a delusion and a snare to propose it as some kind of "antidote" to the inhumane horror that is ObamaCare.

Other than that, I sincerely hope that your new insurance coverage provides you and your family with great health care at prices you can afford. And I'm being completely serious.


Alexa's picture
Submitted by Alexa on

but is also in PBO's 2014 Budget.

From Lynn Stuart Parramore at Alternet:

The financial stability of Americans is further shaken by rising medical costs. A single-payer system would be the most sensible way to address this crisis, and Medicare is the closest thing we have now to single-payer.

Means-testing would harm seniors who already have paltry incomes. Proposals to increase premiums for 25 percent of beneficiaries, for example, could hit American seniors who make as little as $47,000, according to the nonpartisan Kaiser Family Foundation.

and from The Henry J Kaiser Family Foundation:

This brief includes an analysis of a proposal to modify current-law income thresholds and freeze these thresholds until 25 percent of all Medicare beneficiaries are required to pay the income-related premium, based on the parameters in the President’s FY 2014 budget.

As described more fully below, this proposal is estimated to result in higher Medicare premiums for beneficiaries with incomes at or above $45,600 for individuals and $91,300 for couples (in 2013 dollars), once fully implemented in 2036—the year when 25 percent of beneficiaries are estimated to be paying income-related premiums, according to this analysis.

The Congressional Budget Office has estimated that the income-related premium proposal in the President’s FY 2014 budget would reduce Medicare spending by $56.3 billion between 2014 and 2023.

Estimates of 10-year Medicare savings for the other proposals are: $25 billion (CAP), $30.2 billion (President’s FY 2013 budget7); $65 billion (Moment of Truth), and $66.2 billion (BPC).

Rainbow Girl's picture
Submitted by Rainbow Girl on

... great image. Applies widely. Think the Great 401(k) Con. "Invest for the long term; dollar cost average; magic of compounding ...[Subliminal Man - never mind about the fees that are chewing huge percentages off those mirage long term golden pots -- especially since 0 compunds to 0, so if you keep losing all those pennies in The Next Crash ... "

They did a good job capturing the Political Class (Blue and Red Jerseys) and selling us the grand larcemy that was givning up defined pensions for "self-guided market investments" (because choice and magic market).

Swimming and swimming towards a phantom indeed.

phemfrog's picture
Submitted by phemfrog on

i have a question about this idea of labor participation rate...i cant seem to understand this so i am hoping someone here can explain it...

why does a lower participation rate drive down wages? doesnt this mean less supply of labor, so wages go up? or at least they have to hire another person to complete the work that is not being done by the person working less? and why do we (or the CBO) assume that these jobs are lost, and not just shifted?

feel free to link me over to somewhere else for an explanation...

thanks, and always love the thoughtful commentary Lambert.