Obamacare To Crush Workforce By 2.5 Million Workers In Next Decade, CBO Admits

Tyler Durden's picture

When the "impartial" Congressional Budget Office first attempted to predict the impact on the US labor force as a result of the administration healthcare ponzi scheme, also known affectionately as Obamacare and less affectionately by other names, it estimated that 800,000 Americans would drop out of the labor force by 2021. Moments ago it just revised that projection, admitting that it was off by the usual 100% or so: the hit to the US labor force due to Obamacare is now estimated to soar to 2.3 million through 2021, and furthermore the CBO just admitted that the enrollment rate will be dramatically below the White House's baseline estimates, with 2 million fewer people signing up this year than previously estimated.

In brief, as the CBO admits (before it is forced to adversely reduce the numbers once more) the law will lead to 2 million fewer workers in 2017, 2.3 million in 2021 and 2.5 million through 2024. This represents a 1.5% to 2.0% reduction in the numbers of hours worked. As the WSJ recalls, 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 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." Or not.

And here it is straight from the horse's mouth:

The ACA’s largest impact on labor markets will probably occur after 2016, once its major provisions have taken full effect and overall economic output nears its maximum sustainable level. CBO estimates that the ACA will reduce the total number of hours worked, on net, by about 1.5 percent to 2.0 percent during the period from 2017 to 2024, 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.

What does that mean?It means this: "reduced incentives to work attributable to the Affordable Care Act (ACA)—with most of the impact arising from new subsidies for health insurance purchased through exchanges—will have a larger negative effect on participation toward the end of that period." Just don't call it a welfare program.

The above in numbers:

The reduction in CBO’s projections of hours worked represents a decline in the number of full-time-equivalent workers of about 2.0 million in 2017, rising to about 2.5  million in 2024. Although CBO projects that total employment (and compensation) will increase over the coming decade, that increase will be smaller than it would have been in the absence of the ACA.

...

The number of people who will receive exchange subsidies—and who thus will face an implicit tax from the phaseout of those subsidies that discourages them from working—will be smaller initially than it will be in later years. The number of enrollees (workers and their dependents) purchasing their own coverage through the exchanges is projected to rise from about 6 million in 2014 to about 25 million in 2017 and later years, and most of those enrollees will receive subsidies. Although the number of people who will be eligible for exchange subsidies is similar from year to year, workers who are eligible but do not enroll may either be unaware of their eligibility or be unaffected by it and thus are unlikely to change their supply of labor in response to the availability of those subsidies.

The CBO's mea culpa:

CBO’s estimate that the ACA will reduce aggregate labor compensation in the economy by about 1 percent over the 2017–2024 period—compared with what would have occurred in the absence of the act—is substantially larger than the estimate the agency issued in August 2010. At that time, CBO estimated that, once it was fully implemented, the ACA would reduce the use of labor by about one-half of a percent. That measure of labor use was calculated in dollar terms, representing the change in aggregate labor compensation that would result. Thus it can be compared with the reduction in aggregate compensation that CBO now estimates to result from the act (rather than with the projected decline in the number of hours worked).

 

CBO’s updated estimate of the decrease in hours worked translates to a reduction in full-time-equivalent employment of about 2.0 million in 2017, rising to about 2.5 million in 2024, compared with what would have occurred in the absence of the ACA. Previously, the agency estimated that if the ACA did not affect the average number of hours worked per employed person, it would reduce household employment in 2021 by about 800,000.25 By way of comparison, CBO’s current estimate for 2021 is a reduction in full-time-equivalent employment of about 2.3 million.

If you like your horrible 2010 forecast, you can keep your horrible 2010 forecast.

As for the most recent one, which too will be the source of comedy in one year's time, here it is (link).