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Budget Office says Obamacare will lead to job cutbacks

By Andrew Taylor & Ricardo Alonso-Zaldivar

Associated Press

LAST UPDATED: 07:11 a.m. HST, Feb 05, 2014

WASHINGTON >> Several million American workers will cut back their hours on the job or leave the nation's workforce entirely because of President Barack Obama's health care overhaul, congressional analysts said Tuesday, adding fresh fuel to the political fight over "Obamacare."

The workforce changes would mean nationwide losses equal to 2.3 million full-time jobs by 2021, in large part because people would opt to keep their income low to stay eligible for federal health care subsidies or Medicaid, the Congressional Budget Office said. It had estimated previously that the law would lead to 800,000 fewer jobs by that year.

Republican lawmakers seized on the report as major new evidence of what they consider the failures of Obama's overhaul, the huge change in U.S. health coverage that they're trying to overturn and planning to use as a main argument against Democrats in November's midterm elections.

It's the latest indication that "the president's health care law is destroying full-time jobs," said Republican Rep. John Kline of Minnesota, chairman of the House Education and the Workforce Committee. "This fatally flawed health care scheme is wreaking havoc on working families nationwide," he said.

But the White House said the possible reduction would be due to voluntary steps by workers rather than businesses cutting jobs -- people having the freedom to retire early or spend more time as stay-at-home parents because they no longer had to depend only on their employers for health insurance.

The law means people "will be empowered to make choices about their own lives and livelihoods," said White House Press Secretary Jay Carney.

CBO Director Douglas Elmendorf said the top reasons people would reduce work would be to qualify for subsidized coverage and an expanded Medicaid program but that lower wages -- because of penalties on employers who don't provide coverage and looming taxes on generous health care plans -- would also be a factor.

The agency also reduced its estimate of the number of uninsured people who will get coverage through the health care law. The budget experts now say 1 million more people will be uninsured this year than had been expected, partly because of the website problems that prevented people from signing up last fall.

However, it wasn't all bad news for the Obama administration. The CBO's wide-ranging report predicted that the federal budget deficit will fall to $514 billion this year, down from last year's $680 billion and the lowest by far since Obama took office five years ago.

The new estimates also say that the health care law will, in the short run, benefit the economy by boosting demand for goods and services because the lower-income people it helps will have more purchasing power. The report noted that the 2014 premiums that people pay for exchange coverage are coming in about 15 percent lower than projected, and the health care law, on balance, still is expected to reduce the federal deficit.

However, the budget experts see the long-term federal deficit picture worsening by about $100 billion a year through the end of the decade because of slower growth in the economy than they had previously predicted.

As for health care signups, the website woes have largely been cleared up, but the nonpartisan congressional analysts estimated that about 1 million fewer people will enroll through the new insurance exchanges than had been expected this year, for a total of 6 million.

Enrollment is predicted to pick up, topping 20 million in 2016. The exchanges, or online marketplaces, offer subsidized private coverage and cater mainly to middle-class people who don't have health care on the job.

The Congressional Budget Office also revised its Medicaid enrollment projection downward by about 1 million, for a new total of 8 million signups in 2014. About half the states have accepted the health law's Medicaid expansion.

What about those people whose decisions about work might be affected by the new law?

Lower-wage workers are more likely to reduce their hours or quit their jobs because of Obamacare incentives, the report said.

Although some employers will choose not to hire additional workers, or will reduce hours, the budget office said that does not appear to be the main factor.

"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," the report said.

The health care analysis is layered with complexity. The job losses are measured in "full-time-equivalent workers," which means more people are actually affected than, say, the 2 million full-time-equivalent jobs lost in 2017. It could take several part-time workers or people deciding to reduce their hours to produce the wage loss of one full-time equivalent.

The report also contains an important caveat, that the estimate of job losses is "subject to substantial uncertainty" and could be larger or smaller than predicted. There now are more than 130 million jobs in the economy.

Meanwhile, the broad federal deficit projection shows another yearly improvement. Obama inherited an economy in crisis and the first deficits ever to exceed $1 trillion. The 2009 total, swelled by the costs of the Wall Street bailout, hit a record $1.4 trillion, while the deficits of 2010 and 2011 each registered $1.3 trillion.

The agency sees the deficit sliding to $478 billion next year before beginning a steady rise years through 2024 that would bring the annual imbalance back above $1 trillion. Overall, it forecasts deficits totaling $7.3 trillion over the coming decade, about $1 trillion more than previously estimated.

"CBO expects that economic growth will diminish to a pace that is well below the average seen over the past several decades," the report said, citing an aging population and a decrease in the rate of growth in the labor force.

Tuesday's report comes as Obama and Republicans in Congress are taking a respite in the budget wars that have periodically consumed Washington since Republicans took control of the House in 2011. The declining deficit numbers mean they could feel even less urgency to act now.

A December budget agreement and last month's follow-up spending bill could buy peace through November's midterm elections. Republicans also appear to be taking a less confrontational approach to legislation needed this month to increase the government's borrowing limit to avoid defaulting on its obligations.

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samidunn wrote:
The headline is misleading, but what else would you expect from the AP.
on February 5,2014 | 06:18AM
9ronboz wrote:
on February 5,2014 | 06:22AM
HIE wrote:
There are no "jobs" being "lost". The ACA is allowing those 2.5 million Americans to cut back their own hours, because they don't need a full-time job just to have affordable health care. This is exactly what the ACA was meant to do. If you think about it logically, we still have many more millions unemployed or underemployed by no choice of their own. These 2.5 Americans, who will no longer need to work full-time, will open up opportunities for those unemployed and underemployed Americans. The report does not say that businesses are cutting back on hiring by a significant amount. This is a report that says Americans are now free to live their lives without the fear of being one hospital visit away from bankruptcy.
on February 5,2014 | 07:05AM
pcman wrote:
If you believe this, you are being duped, like you will not lose your doctor, health plan or hospital All hogwash. Why would anyone be better off on government freebies when they can work. Medicaid should be for people who cannot work.
on February 5,2014 | 07:28AM
HIE wrote:
FACT CHECK: ANTI-OBAMACARE CHORUS IS OFF KEY http://bigstory.ap.org/article/fact-check-anti-obamacare-chorus-key
on February 5,2014 | 12:14PM
Winston wrote:
Just what the ACA is meant to do? To provide a disincentive for work? I don't think so.

You make it should like a wonderful side benefit, this further cementing the lower 10-20% into endless welfare state dependence. What opportunities magically appear if the only job you can find is part time? Answer: none.

What worry does a poor person have of medically induced bankruptcy? NONE. They are, by definition, broke.

Post such as yours remind me of the old joke about the little boy furiously digging in a pile of manure. When asked why, he says "with all this much horse poop there has to be a pony in here somewhere".

Obamacare supporters seem to hold a similarly wild optimism for a program that does the following:

Breaks the president's promise about keeping your insurance, doctor, and hospital.

2. Reduces the availability of jobs by triple the projected amount. 3. Adds a trillion to our already massive unfunded liability.

4. Caused millions to lose their independent insurance policies.

5. Will cost additional millions to lose their employer provided insurance.

6. Drives up medical cost sharply for the middle class.

And this is just a partial list of the damage: Soon to be recognized are Medicaid doctor shortages, the low quality/narrow health provider networks under ACA, and, in time, the onset of healthcare rationing by an unelected advisory board in DC. While there are positives in this law, they are heavily outweighed by the negatives.

on February 5,2014 | 07:42AM
South76 wrote:
What liberals don't get is that these freebies from government are coming out from someone else's wallet. Carney tried reason that these people who will choose to cut back on their hour so they can get freebies will have more time with families. My question is who do you think is going to pay for these freebies. Liberal work ethics is out of whack. What happened to work hard and get rewarded? What happened to JFK's famous quote: it was something like this--ask not what your country can do for you, but rather ask what you can do for your country...we have seen what happened to eastern Europe with "everybody is equal" socialism, but this country is heading that way and we know how it ends. Socialism in theory looks good, but in practice, well why don't we ask the Cubans, Venezuelan and the North Koreans, they can tell us a lot.
on February 5,2014 | 08:12AM
beachbum11 wrote:
What flavor kool iAd this morning? Are you one of the 2. 5 million? I am over the retirement age yet still working to pay my own way. I did it my way. Work for what you get.
on February 5,2014 | 08:49AM
samidunn wrote:
The headline should have been - ObamaCare to add trillions to the deficit.
on February 5,2014 | 08:24AM
Maneki_Neko wrote:
Obviously this is all Bush's fault.
on February 5,2014 | 07:51AM
South76 wrote:
Good one, after 5 years in office we are still hearing that excuse from the bleeding heart liberals for all the bad things that happens on their watch. Talk about the buck stops here remark.
on February 5,2014 | 08:15AM
cojef wrote:
This what Obama promised, a fundamental change in our government and the way things will be done, "socialism".
on February 5,2014 | 09:16AM
Kaniela wrote:
This headline is very misleading. Even Paul Paul Ryan took exception to this wording. Please refer to the NYT so you can correct your misinterpretation.
on February 5,2014 | 08:10AM
Winston wrote:
I wouldn't refer to the NYT to line the bottom of a bird cage.
on February 5,2014 | 08:17AM
DAGR81 wrote:
This presidency is a complete failure.
on February 5,2014 | 08:11AM
carolm wrote:
you're so right!!!
on February 5,2014 | 11:10AM
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