Inside This Issue - News
Controversy erupts over ACA impact on workforce
February 17th, 2014
WASHINGTON – Debate is raging over a federal agency’s finding that the Affordable Care Act may result in 2.5 million fewer full-time workers.
A study by the nonpartisan Congressional Budget Office concluded that the law’s subsidies, combined with greater access to health care, will lead many Americans to reduce their work hours. The upshot could be a cut in hours of up to 2% from 2017 to 2024, which would translate into a reduction of 2.5 million workers in 2024.
“The effects we estimated are almost entirely choices by people,” CBO director Douglas Elmendorf said at a congressional hearing. He said changes would not result from layoffs but rather from workers opting to cut back on their hours.
Many Republicans said the analysis showed that the ACA would harm economic growth and that it would exacerbate a decline in the labor force from baby boomers retiring.
“These changes — they disproportionately affect low-wage workers,” House Budget Committee chairman Paul Ryan (R., Wis.) said. “Washington is making the poverty trap worse.”
Democrats said the study showed that the health care law would free many Americans from “job lock,” the concept that people stay in one job for fear of losing their health benefits.
More Americans will no longer be tied to a job for health insurance will be able to opt to work fewer hours, Rep. Chris Van Hollen (D., Md.) said. Before the ACA, losing one’s job meant losing one’s insurance, he said.
Elmendorf stressed that the statute’s effect on the labor market could be hard to predict. He said that reduced hours would cut overall wages and taxes. But he also said the law could create short-term new jobs by boosting disposable income from workers who in the past had to set aside money for health coverage.
The National Republican Senatorial Committee used the CBO analysis to malign Democratic candidates, saying their backing of the ACA has “dire consequences.”
“So many of the promises these Democrats repeatedly made about Obamacare have turned out to be false and unfortunately middle-class Americans continue to pay the price,” Brook Hougesen, the committee’s press secretary, said in a statement.
White House press secretary Jay Carney said the CBO report revealed that “the Affordable Care Act in later years will provide freedom, choice and opportunity to Americans that they did not previously have. It will allow people who are locked in jobs because they desperately needed the health insurance and couldn’t get it any other way to have the peace of mind of being able to get affordable, quality health insurance through the exchanges instead and to start a business perhaps or to stay at home and take care of kids instead of having to work.”
“So it is remarkable to me — and this has been pretty well commented on in the wake of the report — that a Republican party that used to herald freedom, choice and opportunity, that used to call for specifically an end to job lock created by the need for health care and health insurance, is now finding in this report — which is overwhelmingly positive when it comes to its assessment of the Affordable Care Act — a political slogan that happens to be factually challenged.”
Also drawing fire of late has been the ACA’s mandate that employers provide health insurance for anyone working 30 hours a week.
“Many retail and restaurant employees do not fit neatly into full- and part-time categories, and compliance with the unprecedented levels of change under the ACA will be particularly challenging,” said National Retail Federation vice president and employee benefits policy counsel Neil Trautwein.
Testifying before the House Ways and Means Committee, he said the law is especially burdensome for small employers who cannot afford the sophisticated and expensive strategies needed to fully comply with its mandates, requirements and penalties.