WASHINGTON -- The Congressional Budget Office on Tuesday updated its estimates on the Affordable Care Act, saying the law would result in 2 million fewer full-time workers by 2017, and 2.5 million by 2024.
Almost instantaneously, the political world was in an uproar. Obamacare was fulfilling the worst prognostications of its most ardent detractors.
But the headlines didn't entirely reflect what the CBO was saying. The health care law wouldn't cause those jobs to be eliminated by employers. In fact, the nonpartisan CBO's report specifically stated, "there is no compelling evidence that part time employment has increased as a result of the ACA."
Rather, the CBO was projecting that employees would be encouraged to leave the work force entirely, or shift to part-time work, for two reasons. The first is that their access to affordable insurance is no longer linked to their employer. The second is that because the subsidized health care available from the law is linked to income, it creates a disincentive to earn above a certain threshold.
This prompted a lot of pointed questions. Should public policy encourage people to work shorter hours or make less money in hopes of getting a larger tax subsidy? Would people find themselves worse off if they decide to forgo salary in exchange for cheaper health insurance? On a broader level, what kind of impact would that have on the country's gross domestic product?
The CBO doesn't answer those questions, noting that any estimate of the Affordable Care Act's "impact on labor markets is subject to substantial uncertainty." But the agency does explore good and bad effects on labor productivity that come with loosening the so-called job lock, in which people feel they can't leave an employer for fear of losing health care coverage.
On the bad front, the CBO notes that some employers may be rewarded to "invest less in their workers" (by, say, reducing training) if they believe there is going to be greater turnover of employees. Why spend money training someone who may end up leaving or asking to work fewer hours?
On the flip side, the CBO notes that when there is greater access to coverage on the individual market, it could "lead to improved health among workers" and "labor productivity could be enhanced." In addition, the CBO wrote, "the ACA could influence labor productivity indirectly by making it easier for some employees to obtain health insurance outside the workplace and thereby prompting those workers to take jobs that better match their skills, regardless of whether those jobs offered employment-based insurance."
This last point is not insignificant. In fact, it was one of the few outcomes of the law that has received positive press attention -- at least prior to Tuesday's CBO report.
In September, NBC News profiled Claudia and Joseph Schulz, an Arizona couple who had talked about starting their own real estate shop together, but had held off because they worried about giving up their health insurance.
In an interview Tuesday with The Huffington Post, Claudia Schulz explained that members of her family (they have three kids) had pre-existing conditions, making any change of employment rife with uncertainty.
"We had amazing jobs," she said. "We didn't have a problem with it. We didn't feel lost or trapped in our jobs. We had thought about opening our own business and one of the obstacles was not having good health insurance. When the Affordable Care Act came around, we thought, well now might be a good time. ... It was an obstacle removed."
That September, the Schulzs left their respective jobs. In October, they encountered some difficulty with the health care website rollout. But it wasn't overwhelming or discouraging, Claudia Schulz said. The tougher choice was picking the plan they wanted. The one they found had a $700 monthly premium for the entire family and a $12,000 deductible, she said. The deductible was "a little bit higher" than the one she and her husband had on their COBRA coverage. But the premium was $900 a month lower.
"With the difference, we are saving for our deductible," she said. "Hopefully, we won't have to use it and we can just add to our savings."
The family did not receive a tax subsidy for purchasing insurance. But their previous doctors (including their pediatrician and dentist) fell under the same network. They are now building their own residential real estate firm.
"It helped us," Claudia Schulz said of Obamacare. "I actually think it is good for small businesses. I'm now contributing to the economy, building a website, using contractors, and hiring small mom and pop shops for help."
The Schulzs' story is just one of many that will be told in the wake of the CBO report. There will be negative experiences to go with the family's positive one.
Certainly, if a large number of workers flee the labor force, it could depress economic growth. But Paul Fronstin, a senior research associate at the nonpartisan Employee Benefit Research Institute told The Huffington Post it would be hard to measure whether there would be a big net drop in employment. A job opening created by someone who leaves or decides to work part time "creates an opportunity for somebody else," he noted. But, he added, "there are situations where employers are going to lose key people that they won't necessarily be able to replace easily, so you're losing some human capital"
In the context of the uproar over the CBO report, however, it is worth noting that, in the past, a lot of people were eager to ease the constraints imposed by employer-based health insurance. In 2008, a Harvard study estimated that there were 11 million people who wanted to change jobs, but were locked into their current work because they didn't want to lose their insurance.
At that point, it was the Republican Party that wanted to upend the system by encouraging the type of job mobility that the CBO now says will result from Obamacare. In a 2008 essay, then-presidential candidate John McCain (who had proposed replacing the tax break for employer-based insurance with a tax credit for people to buy insurance on the individual market) argued that "job lock" was reducing "opportunities for workers because they often pass up new jobs for fear of losing their health care."
That same year, the conservative Heritage Foundation wrote about the importance of breaking job lock.
Today, leaving a job or changing jobs means leaving behind the health insurance provided at the place of work. Individuals who wish to take a better job, change careers, or leave the workforce to raise a family or to retire early take substantial risks. They may find themselves going without coverage, purchasing non-group insurance with substantial tax penalties, or giving up a well-developed relationship with a physician or medical specialist. This health insurance obstacle to labor mobility is sometimes called "job lock."
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