The medium-term effects of Obamacare will likely be fewer hours worked and lower incomes for most income brackets, according to reports from the Brookings Institution and the Congressional Budget Office. If you live in a Senate battleground state, expect to hear a lot about this — but not a lot about the significant caveats that apply.
Obamacare will reduce the labor force and hours worked.
The Congressional Budget Office's annual economic projection was released on Tuesday, updating the non-partisan agency's expectations for the deficit and debt over the next decade. (Both are projected to continue during that time period, you will be unsurprised to learn.)
Oh: Obamacare will likely reduce the deficit by $206 billion between 2015 and 2024. That detail crops up in the more politically explosive part of the report, Appendices B and C, which outline how the Affordable Care Act will affect insurance coverage and the labor force. (Politically explosive appendices! Are you not entertained?) Among the CBO's findings: the botched healthcare roll-out meant one million fewer enrollments than the Obamacare exchanges would have otherwise seen.
But its the workforce data that's most significant over the long-term. (The CBO figures those lost enrollments will be regained over time.) Measuring out from 2016, the point at which Obamacare will be fully implemented:
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.
There are three parts to that:
- Hours worked will drop 1.5 to 2.0 percent — "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."
- It's because "workers will choose to supply less labor," or, in other words, people will leave or not take jobs. As the report states later, "The estimated reduction 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."
- Workers will leave jobs because of new taxes, incentives, and financial benefits.