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Obamacare will shrink workforce by 2 million, report says

W.H. defends Obamacare amid CBO findings 02:36

Given the new incentives offered by the Affordable Care Act, people will choose to work less in the coming years, nonpartisan budget analysts say -- shrinking the workforce by the equivalent of 2 million full-time workers by 2017 and by 2.5 million by 2024.

Republicans, already intent on making the controversial health care law a 2014 campaign issue, seized on the new data from the Congressional Budget Office (CBO) to argue the law is hurting the economy. The White House, however, defended the law, charging the GOP with spinning the facts.

“The middle class is getting squeezed in this economy, and this CBO report confirms that ObamaCare is making it worse,” House Speaker John Boehner, R-Ohio, said in a statement.

Sen. Orrin Hatch, R-Utah, the top Republican on the Senate Finance Committee, called the CBO report “terrible news.”

“Obamacare, the President's signature domestic policy achievement, will lead to more than 2 million fewer jobs and hurt much-needed economic growth,” he said. “A direct threat to the long-term health and prosperity of our nation, this law must be repealed.”

The CBO report notes that the reduction in labor “stems almost entirely from a net decline in the amount of labor that workers choose to supply, rather than from a net drop in businesses’ demand for labor.”

People will choose to work less because of a variety of new factors to consider. For instance, some will retire early since they will no longer have to rely on their employer for insurance. Others will choose to work less because more work income would make them eligible for less in Obamacare subsidies.

Since these workers will be choosing to work less, the reduction in labor will not register as a rise in “unemployment” figures, which only count workers who are actively looking for work.

The budget office also noted that its estimate of the law’s impact on the labor market is “subject to substantial uncertainty.”

White House spokesman Jay Carney said in a statement that “claims that the Affordable Care Act hurts jobs are simply belied by the facts in the CBO report.”

“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,” Carney said. “At the beginning of this year, we noted that as part of this new day in health care, Americans would no longer be trapped in a job just to provide coverage for their families, and would have the opportunity to pursue their dreams.”

Carney also addressed the lingering charge that the employer mandate -- the requirement for businesses with 50 or more full-time employees to provide insurance coverage for their workers -- is driving employers to hire more part-time workers.

“CBO’s findings are not driven by an assumption that ACA will lead employers to eliminate jobs or reduce hours, in fact, the report itself says that there is ‘no compelling evidence that part-time employment has increased as a result of the ACA,’” Carney said.

The CBO report does say that “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. But such shifts might not reduce the overall use of labor.”

In addition to estimating Obamacare’s impact on the labor market, the CBO in its new report adjusted its estimates of the law’s impact on health coverage in the U.S.

Initially, 7 million people were expected to sign up for private insurance coverage through the Obamacare marketplaces this year, but the CBO now expects 6 million enrollees. Enrollment is expected to increase sharply in the following years, with 24 million to 25 million enrollees expected by 2017.

The Affordable Care Act coverage provisions -- such as the new marketplaces and the expansion of Medicaid in some states -- are expected to increase coverage by about 13 million in 2014,  20 million in 2015, and 25 million in each subsequent year through 2024.

In spite of that, about 31 million nonelderly people are expected to be uninsured in 2024. About 45 percent of those people simply won’t buy insurance, the CBO predicts, while another 5 percent are expected to come from states that have decided not to expand Medicaid. Undocumented immigrants ineligible for most benefits are expected to account for 30 percent of those left uninsured.

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