Obamacare Likely To Cause Reduction In Total Hours Worked

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The Congressional Budget Office released a report today highlighting that the implementation of the Affordable Care Act (so-called Obamacare) over the next few years will likely cause low wage workers to work less hours overall. The reasoning behind the claim is that the tax credit subsidies lower-income Americans receive will encourage some people to work less. The CBO assumes that the fact the subsidies are income-graduated and disappear at higher incomes will encourage people at various eligibility thresholds to cut back on work so they don’t lose the tax credits.

Obamacare health insurance subsidies

The CBO calculates that the health insurance subsidies provided to low-income Americans under the ACA will add up to somewhere around $20 billion in 2014. Those earning up to 400 percent of the federal poverty level, or around $94,200, can receive tax credits to subsidize health insurance premiums.

Details of the CBO report

The report estimates that Obamacare will cause the total number of hours worked to decrease by about 1.5% to 2.0% from 2017 to 2024, largely because workers will choose to work less given the new subsidies and incentives in the ACA.

This decrease in total hours worked anticipated by the CBO is the equivalent of 2 million fewer workers in the labor force in 2017. The CBO had projected the loss of the equivalent of around 800,000 workers by 2021 in an earlier report.

15 million new insured by 2020 due to Obamacare

It should also be noted, however, that the CBO report also suggested the ACA would be successful in providing health insurance to tens of millions who have never had health insurance in the past. The report projected that only 30 million Americans would be without heath insurance by 2020, down from the 45 million without health insurance today or the projected 55 million that would not have had any health coverage without the ACA.

Republicans trumpet new report

U.S. Representative John Kline, a Minnesota Republican and chairman of the House Education and the Workforce Committee, hailed the report as evidence of the ills of Obamacare. “[The report] is further evidence the president’s health-care law is destroying full-time jobs,”

U.S. House member Diane Black, a Tennessee Republican, used the CBO report to call for the repeal of the ACA. “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. 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.”

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