Depending on Obamacare

Posted: 5 February 2014 in Uncategorized
Tags: , , , , ,


Much is being made the past couple of days about the Congressional Budget Office’s latest estimate [pdf] of the effects of the Affordable Care Act on jobs.

The Washington Post’s Fact Checker collects some of the misleading tweets and headlines and sets the record straight: the CBO does not conclude that Obamacare is going to “kill” 2.3 million jobs. It says some workers will choose not to work or to work less, because of the increased availability of Medicaid and subsidized health insurance, to the tune of 2.3 million full-time equivalent workers. Or, as the CBO itself explained,

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, so it will appear almost entirely as a reduction in labor force participation and in hours worked relative to what would have occurred otherwise rather than as an increase in unemployment (that is, more workers seeking but not finding jobs) or underemployment (such as part-time workers who would prefer to work more hours per week).

Got it? In other words, it’s an analysis of what might happen on the supply side of the labor market (the number of hours people are willing to work) not the demand side (the number of workers employers are willing to hire).*

And why is that so bad? Right now, workers are dependent on their employers to receive a wage or salary in order to purchase the necessities of life (food, clothing, and shelter), plus whatever they can put aside to make payments on their debt (think mortgages and student loans) and to save for retirement (if anything is left over)—and, of course, their healthcare (insurance premiums and out-of-pocket expenses). If they’re lucky, under the current system (which is not going to change under Obamacare), their employers transfer a small portion of their profits to health insurers in order to get access to the employees’ ability to work. That’s what keeps workers going back to work day after day, even when their pay is low and working conditions are awful (they need to purchase those commodities) and what makes sure employers continue to offer health insurance (to keep employees coming back to work rather than going elsewhere).

Obamacare has changed one thing: it makes workers somewhat less dependent on employers to get access to health insurance, either because they’ve become eligible for Medicaid (if they happen to live in states where Medicaid coverage has expanded) or because subsidies for low-income workers has made purchasing their own health insurance more affordable. Workers who fall into these categories—mostly at the low end of the distribution of income—are now somewhat less dependent on their employers to get access to health insurance, which makes it possible for them to offer to work shorter hours or to quit their jobs entirely.

But, remember, workers who qualify for Obamacare are still dependent on for-profit health insurers (if, that is, they don’t qualify for Medicaid) and for-profit healthcare providers (which, aside from health cooperatives and the Veterans Administration, is still the way most healthcare is provided in the United States). And they’re still dependent on working for a wage or salary to purchase everything else (as well as paying off any debts and, if they can, saving for retirement).

As a result of Obamacare, workers are a bit less dependent on employers to get access to decent healthcare. What the misleading tweets and headlines demonstrate is they want to continue workers’ complete and total dependence on their employers for everything.


*The CBO does mention that the demand for labor might also increase, as low-income workers decide to purchase more goods and services, thereby indirectly leading to an increase in the number of jobs available.

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