Scandal Sheet

The CBO outlines how Obamacare is hurting workers

This article originally appeared on heartland.org

The Congressional Budget Office’s latest report includes some astounding evidence of how Obamacare is impacting the labor market in a negative way. Sean Hackbarth highlights some key quotes from the report:

The reduction in CBO’s projections of hours worked represents 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. … CBO estimates that the ACA will reduce the total number of hours worked, on net, by about 1.5 percent to 2.0 percent during the period from 2017 to 2024, almost entirely because workers will choose to supply less labor – given the new taxes and other incentives they will face and the financial benefits some will receive. … In the longer run, some businesses also may decide to reduce their hiring or shift their demand toward part-time hiring – either to stay below the threshold of 50 full-time-equivalent workers or to limit the number of full-time workers that generate penalty payments.

Scott Gottleib explains:

As workers transition from part time work (without benefits) to full time work (with health benefits) many workers will actually lose income in the form of the subsidies that they will have to forgo (and the additional fact that lower wage workers, who are in lower tax brackets, won’t benefit as much from the implicit subsidy they will get from the special tax treatment of health benefits that they receive by purchasing their health insurance through their employer). CBO seems to focus mostly on people who are out of the labor force for a period of time and transitioning back to full time work, which suggest its estimates may be low.

CBO states, in reference to these impacts, that the “exchange subsidies effectively constitute a tax on labor supply for a broad range of workers.” CBO focuses mostly on those transitioning to full time work (with benefits). But the same disincentives apply to workers on Obamacare who are already employed full time, and looking to grow their income.

The congressional actuaries go on to state that forgoing Obamacare subsidies and returning to full time work with health benefits (for lower wage and middle class workers) amounts to an average, implicit tax of about 15% paid by each worker. CBO does note that these considerations only affect a segment of the workforce – specifically the middle class and working class who earn annual incomes that put them below 400% of the Federal poverty level (about $95,000 for a family of four). But that represents a large portion of the labor market.

These disincentives can’t be easily fixed – they are baked into the structure of the Obamacare subsidies. A refundable tax credit, similar to the one offered in some conservative plans, sidesteps many of these effects.

Sean Davis has more from the report. And it’s not like the non-partisan CBO is alone in this conclusion: It is consistent with the latest report from the Federal Reserve as well. Whatever the reality of Obamacare’s impact on the percentage of America that is insured or uninsured, it seems clear that they are reducing the number of working hours available and decreasing hiring in professions and positions that are most likely to be filled by the working class … the very people Obamacare was originally intended to help.

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