Obamacare is slowing growth, spurring labor force cuts, report says

02/04/2014 11:00 AM

02/04/2014 1:51 PM

Obamacare will reduce the total number of hours Americans work by the equivalent of 2 million full-time jobs in 2017, mostly among low-wage earners, the Congressional Budget Office said Tuesday.

The nonpartisan agency’s report found that the health care law’s negative effects on the economy will be “substantially larger” than what it had previously anticipated. It had previously estimated the decrease would be the equivalent of 800,000 jobs.

"All our analysis led us to conclude the effects of the (health care law) on labor force participation would be a good deal larger than we had thought originally," CBO director Doug Elmendorf said. "Fundamentally, the Affordable Care Act provides subsidies to lower-income people and those subsidies phase out ... that will have some effects on discouraging labor supply."

The health care law isn’t the only reason the CBO is projecting slower economic growth between 2014 and 2023, however. It also cited inflation and lower productivity as reasons why it was lowering its projections.

The slower growth will mean less tax revenue, which will add to the deficit.

Low-wage employees may choose to give up extra hours of work to avoid losing subsidies or tax advantages under the law, the report said.

The Patient Protection and Affordable Care Act, known as Obamacare, can be expected to cover 6 million people through its insurance exchanges this year, according to the report. By 2017, between 24 million and 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.


Join the Discussion

The Kansas City Star is pleased to provide this opportunity to share information, experiences and observations about what's in the news. Some of the comments may be reprinted elsewhere on the site or in the newspaper. We encourage lively, open debate on the issues of the day, and ask that you refrain from profanity, hate speech, personal comments and remarks that are off point. Thank you for taking the time to offer your thoughts.

Terms of Service