Obamacare to Cut Hours of Work by 2017, CBO Estimates

Obamacare will reduce the hours Americans work by the equivalent of 2 million full-time jobs in 2017, the Congressional Budget Office said, sparking renewed Republican criticism of the law and a fresh defense from the White House.

The total number of hours worked will fall about 1.5 percent to 2 percent from 2017 to 2024 as a result of the health-care overhaul, the CBO said yesterday in a report. The reduction, about twice the agency’s estimates in 2010, is due “almost entirely” to low-wage employees who may choose to give up extra hours of work to avoid losing subsidies or tax advantages under the law, the report said.

Republicans said their warnings that the health law would discourage employment are proving correct. The report “is further evidence the president’s health-care law is destroying full-time jobs,” U.S. Representative John Kline, a Minnesota Republican who is chairman of the House Education and the Workforce Committee, said in a statement.

President Barack Obama’s advisers pushed back against Republican interpretations of the CBO report and assertions the law would cause employers to cut jobs and hours. They said the CBO didn’t calculate aspects of the law that would lead to the creation of 250,000 to 450,000 jobs a year.

“Over the longer run, CBO finds that because of this law, individuals will be empowered to make choices about their own lives and livelihoods, like retiring on time rather than working into their elderly years, or choosing to spend more time with their families,” White House Press Secretary Jay Carney said in a statement.

New Coverage

The Patient Protection and Affordable Care Act, known as Obamacare, is expected to cover 6 million people through its insurance exchanges this year, according to the report. About 8 million people will enroll in an expansion of Medicaid, the state-run health plan for the poor, under the law. Both figures represent reductions of 1 million from the agency’s estimates before the Obama administration’s faltering rollout of the insurance expansion began in October.

The report indicates the CBO analysts realize “they’ve been overly optimistic about the ACA and they need to make some adjustments,” Joseph Antos, a health economist at the nonprofit American Enterprise Institute who advises the agency, said in a telephone interview. “The proof of all this is actually having the law implemented and seeing what happens over the next few years with employment.”

Insurance Marketplaces

The Affordable Care Act marks the largest U.S. expansion of health insurance in more than 40 years. The law was passed by a Democratically controlled Congress in 2010 and many of its major provisions took full effect Jan. 1. The ACA set up government-run insurance exchanges where Americans can buy private health plans with the help of federal tax credits and expanded eligibility in Medicaid.

About 3 million people signed up for private plans through Obamacare from Oct. 1 to Jan. 24, the Department of Health and Human Services said last month. The law’s first enrollment period ends March 31.

By 2017, from 24 million to 25 million are expected to obtain coverage each year, the CBO said.

The subsidies given to low-wage earners to help them afford insurance under the law will total $20 billion in 2014, along with related spending, the report said. People earning as much as 400 percent of the federal poverty level, or about $94,200, are eligible for tax credits that discount premiums they pay in the exchanges.

The subsidies disappear at higher incomes, which may encourage people at the threshold of eligibility to cut back on work so they don’t lose the tax credits.

‘Devastating Effects’

“My Republican colleagues and I have been warning for years of the devastating effects Obamacare would wreak on our health-care system and our economy,” U.S. Representative Diane Black, a Tennessee Republican, said in a statement. “This report from CBO further underscores the need to repeal Obamacare and replace it with a system that expands access to health care and doesn’t put Americans out of work.”

Jason Furman, chairman of the White House Council of Economic Advisers, said the labor market is more complicated than a simple calculation of how many people are seeking more hours of work.

“CBO’s analysis itself is about the choices that workers are making in the face of new options afforded to them by the Affordable Care Act, not something about firms destroying jobs,” Furman said in a briefing with reporters. “I have no doubt that if, for example, we got rid of Social Security and Medicare, there are many 95-year-olds that would choose to work more. I don’t think anyone would say that was a compelling argument to eliminate Social Security and Medicare.”