Dive Brief:
- By 2025, the Affordable Care Act will cause the labor supply to be 0.86% smaller than it would have been without the healthcare law--or the equivalent of 2 million fewer full-time workers, the Congressional Budget Office predicts.
- The CBO isn't suggesting employers will cut workers or their hours, but individuals in both part and full time roles will scale back due to changes in incentives, such as those who were in the workforce specifically for employer health benefits.
- The CBO based its calculations on the impacts of the law’s major components on tax rates and on research about changes in labor supply as a result of changes in tax rates. It adds for some components of the law, the CBO based its estimates on information about related policy changes.
Dive Insight:
The estimate is drawing debate over whether it indicates a negative blow to the labor force, or a positive change by providing workers with flexibility.
“When the President’s health law hurts the labor force at the same time it increases healthcare premiums and taxes, it’s clear the law is not working for the American people,” Senate Finance Committee Chairman Orrin Hatch (R-Utah) was quoted by The Hill.
At the same time, the White House points to the jobs the healthcare law has created, noting that since ObamaCare became law, "The private sector has added 13.7 million jobs over 69 straight months, the longest streak on record."
Regardless of viewpoint, however, the CBO notes its estimates are based on uncertain evidence and it doesn't know how people will react to the changes in work incentives.