Obamacare will push 2 million workers out of labor market: CBO
Obamacare will push the equivalent of about 2 million workers out of the labor market by 2017 as employees decide either to work fewer hours or drop out altogether, according to the latest estimates Tuesday from the Congressional Budget Office.
That’s a major jump in the nonpartisan budget agency’s projections and it suggests the health care law’s incentives are driving businesses and people to choose government-sponsored benefits rather than work.
“CBO estimates that the ACA will reduce the total number of hours worked, on net, by about 1.5 to 2 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,” CBO analysts wrote in their new economic outlook.
The scorekeepers also said the rollout problems with the Affordable Care Act last year will mean only 6 million people sign up through the state-based exchanges, rather than the 7 million the CBO had originally projected.
But over the long run, Obamacare will eventually catch up and by 2020 only about 30 million people will be without insurance coverage — down from 45 million this year. That will mean about 92 percent of legal U.S. residents without guaranteed access to Medicare will have insurance coverage.
Taking the budget as a whole, the CBO said Congress has made substantial headway on cutting spending and raising taxes, which has cut the deficit in 2014 to just $514 billion.
That deficit will continue to drop in 2015, but will then begin to quickly rise, once again topping $1 trillion in 2022.
The CBO analysis said the economy isn’t rebounding as fast as usual after such a deep recession, and said that poor growth means less revenue coming in to the Treasury Department — which means the cumulative deficit over the next decade will be $1 trillion more than projected just last year.
Debt, which is the accumulation of those annual deficits, is already at its highest level since the aftermath of World War II, and the CBO says debt held by the public will be nearly 80 percent of gross domestic product by 2024, which is the end of the budget window.
The new report will give ammunition to those who argued that tax increases or spending cuts should have been delayed while the government pursued more stimulus spending to boost economic growth over the last few years.
But the CBO’s report also suggests that the problems are more structural, given the aging U.S. population and women’s participation in the labor force.