WASHINGTON—After months of reports on higher premiums and lost coverage, the Congressional Budget Office on Tuesday confirmed what most Americans already knew: Obamacare is hurting workers. In the latest CBO report, non-partisan budget crunchers project the Affordable Care Act will cost the economy the equivalent 2.3 million full-time jobs by 2021 and will continually stifle economic growth, especially after 2016.
The CBO previously estimated the president’s healthcare law would result in 800,000 fewer jobs, but it revised the numbers based on a variety of factors, including employers reducing full-time workers to part-time hours, and people who may choose to remain unemployed to keep government subsidies. For those already in the workforce, the report notes subsidies phase out as income rises, “creating an implicit tax on additional earnings—whereas for other people the act imposes higher taxes on labor income directly.”
Congressional Republicans pounced on the news: “Today’s CBO report confirms the devastating effects that Obamacare is having on jobs and the economy,” said Rep. Diane Black, R-Tenn., a member of the House Ways and Means Committee.
The CBO estimates the botched Obamacare rollout will result in 1 million fewer enrollees this year—which experts told WORLD could result in a death spiral for the law—but it acknowledges the program may see a late surge as the March 31 enrollment deadline nears.
Regardless, the long-term economic outlook remains bleak. Last week in his State of the Union address, President Barack Obama boasted about the shrinking federal budget deficit, projected to drop to $514 billion this year and $478 billion in 2015. But the CBO says the downward trend won’t continue: It anticipates the annual deficit will again top $1 trillion by 2022, and the federal debt will move from 74 percent of the country’s gross domestic product (GDP) this year to 79 percent in 2024. Interest on the debt is expected to quadruple in the next decade as the debt soars above $27 trillion.
“The large budget deficits recorded in recent years have substantially increased federal debt, and the amount of debt relative to the size of the economy is now very high by historical standards,” the report said. “Such large and growing federal debt could have serious negative consequences.”
The CBO projects the labor participation rate, already historically low, will only get worse as Obamacare takes full effect, reducing the total net number of hours worked between 1.5 and 2 percent (with the largest decline among low-income workers) and reducing aggregate wages by 1 percent between 2017 and 2024. This is “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.”
White House press secretary Jay Carney called the CBO’s work incomplete and said the fact that people have the freedom to choose to work less is a good thing.
Rep. Paul Ryan, R-Wis., chairman of the House Budget Committee, said the report is a call to action for lawmakers. “Today’s report is an important reminder that the debt won’t take care of itself,” he said. “CBO says autopilot spending and interest payments are the main drivers of our debt. In other words, we still have a spending problem.”
The report ensures healthcare will be a central issue in the mid-term elections this fall and could lead to growing support for Republican alternatives to Obamacare. Last week Sens. Richard Burr, R-N.C., Tom Coburn, R-Okla., and Orrin Hatch, R-Utah, unveiled the Patient Choice, Affordability, Responsibility, and Empowerment (CARE) Act, which they say will use market-based approaches to increase access to coverage—including those with pre-existing conditions—lower costs, and incentivize, rather than mandate, insurance coverage.
Some experts think the plan could work: The Center for Health and Economy released a report predicting the proposal would lower healthcare costs, lower premiums, and cover roughly as many people as Obamacare. The report also found the alternative plan would increase medical productivity 2 to 3 percent and cut almost $1.5 trillion from the national debt over 10 years.
“For millions of Americans, Obamacare itself has become a preexisting condition that has caused them to lose their insurance, their doctors and their choices," Coburn said. “Congress has a responsibility to not only repeal this misguided law but replace it with a plan that will provide better care at a lower cost, and will help preserve programs like Medicaid instead of driving them closer to bankruptcy.”