Health-Care Law Expected to Take Greater Toll on Workforce

Affordable Care Act Seen Cutting 2.3 Million Full-Time Workers by 2021

The Wall Street Journal
File photo of U.S. President Obama delivering remarks on Obamacare at an Organizing for Action grassroots supporter event in Washington
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U.S. President Barack Obama delivers remarks on the Affordable Care Act, commonly known as Obamacare, at an Organizing for Action grassroots supporter event in Washington, in this November 4, 2013, file photo. New Year's Day will bring a fresh test for President Barack Obama's healthcare overhaul, as hundreds of thousands of Americans will begin to use the program's new medical coverage for the first time. REUTERS/Jonathan Ernst/Files (UNITED STATES - Tags: POLITICS HEALTH)

WASHINGTON—The Affordable Care Act is projected to reduce the number of full-time workers by roughly 2.3 million people through 2021 and insure 2 million fewer people this year than previously estimated, the Congressional Budget Office said Tuesday.

The CBO had previously estimated the labor force impact would be around 800,000 people in that time frame. CBO said the jobs figures largely represent Americans who will choose not to work rather than those who will lose their jobs or have their workweeks reduced because of the law.

The new estimates could further complicate the political landscape ahead of the midterms for some vulnerable Democrats, as Republicans are planning to use the health-care law as a cudgel in November. While the White House has been working to reverse the number of workers who are leaving the labor market, and CBO's new estimates on this phenomenon could embolden many in the GOP.

The White House didn't immediately comment on the CBO's numbers. But in the past, the administration has dismissed suggestions that the health law is reducing full-time employment.

In July, President Barack Obama's chief spokesman, Jay Carney, said, "I would say broadly that if you look at the economic data, the suggestion that the ACA is reducing full-time employment is belied by the facts."

The CBO is a nonpartisan government division that advises Congress on budget and economic matters, among other things.

The rolling impact of the law will lead to 2 million fewer workers in 2017, 2.3 million in 2021 and 2.5 million through 2024, the CBO forecast. This represents a 1.5% to 2.0% reduction in the numbers of hours worked.

CBO last year projected 7 million people would enroll for health insurance through health-care exchanges in 2014, but Tuesday it said technical problems that plagued the program's rollout forced it to lower its estimate by 1 million people.

"Those changes primarily reflect the significant technical problems that have been encountered in the initial phases of implementing the [law]," the CBO said. It said it couldn't yet revise estimates for future years. CBO also projected 8 million new people would qualify for Medicaid and other expanded coverage this year, down from a 2013 estimate of 9 million people.

The CBO projected the average premiums for insurance coverage through new health care exchanges would be roughly 15% less than previously estimated for 2014, based upon a review of plans offered. It said it couldn't make estimates yet for future years.

CBO attributed the law's projected effect on the labor force to several factors. Because the health law will, beginning in 2015, impose a penalty on companies that employ 50 or more full-time workers but don't offer insurance, the CBO figures that penalty will, at least initially, reduce employers' demand for workers and could result in cuts to wages as costs are passed on to employees. It also says another effect will be "encouraging part-year workers to delay returning to work in order to retain their insurance subsidies," among other things.

The health-care law's open-enrollment process began in October and runs through March, and CBO estimated "the number of [people who sign up [for coverage] will increase sharply toward the end of the period."

The CBO estimated the government would also collect a net of $8 billion through "risk corridor payments" from health insurers from 2015 through 2017. It had previously estimated these payments between the government and insurers would offset each other.

The report also said employment-based health coverage would fall between 6 million and 7 million each year from 2016 through 2024 because of the law.

Separately, CBO projected the deficit will continue to fall in 2014 and 2015 before rising slowly and steadily through the rest of the decade. It estimated the deficit in 2014 will fall to $514 billion, which represents 3.0% of gross domestic product. The deficit was roughly $680 billion in 2013, which is 4.1% of GDP. The White House has long seen 3.0% as a deficit target.

The CBO projected GDP growth would be 3.1% in 2014, and 3.4 in 2015 and 2016, but it estimated the unemployment rate at the end of 2014 would be 6.7%, the same level as at the end of 2013.

CBO's GDP projections are lower than in past forecasts, and the agency said Tuesday this would worsen the deficit over the next decade. It now estimates that at revenue will be $1.4 trillion less than under more robust growth over the next 10 years.

—Jared A. Favole contributed to this article

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