The new Congressional Budget Office report gives ammunition to Republicans and puts Democrats on the defensive. It said the Affordable Care Act would reduce the number of full-time workers by more than 2 million by the year 2024. But as usual, the truth is more complicated than the headlines and press releases suggest.
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Now to a prediction that has re-ignited the ongoing controversy over the Affordable Care Act. The Congressional Budget Office yesterday released a report that contained an intriguing prediction about Obamacare. According to its analysis, the federal health care law would lead to two million fewer full-time workers by the year 2024. That prediction was immediately seized upon by Republicans, who hailed as an I-told-you-so moment. The White House was once again put in the position of defending the president's controversial health care law.
As NPR's national political correspondent, Mara Liasson, reports, the truth is complicated.
MARA LIASSON, BYLINE: The nonpartisan independent Congressional Budget Office regularly analyzes the economic effects of policy and legislation. And CBO reports often end up as political ammunition for both parties. Yesterday's report on the labor market effects of the Affordable Care Act gave Republicans plenty to work with. The speaker of the House, John Boehner, said the report, quote, confirmed the devastating impact of Obamacare. And here's Texas Republican Senator John Cornyn.
SEN. JOHN CORNYN: The president's own healthcare policy is killing full time work. The Congressional Budget Office said the number of full time workers will go down by two million in the coming years as the result of the Affordable Care Act.
LIASSON: The White House knew it had a problem on its hands so it brought out the president's top economist, Jason Furman. The chairman of the White House Council of Economic Advisors offered a different read of the CBO report. He said it showed the ACA was having a positive economic impact.
JASON FURMAN: And in particular, what CBO finds is that the tax credits for health coverage, Medicaid, will help put more money in people's pockets, help them able to spend more and that will provide a boost to the economy.
LIASSON: But to Utah Republican Congressman Jason Chaffetz, who spoke on Fox News, those tax credits are just continuing the trend to greater dependency on the federal government.
REP. JASON CHAFFETZ: You look at the number of people who are increasingly going on the government dole, there are 30 million more Americans since the year 2000, 30 million more on food stamps. Now, of course we want to help the most needy of Americans. Of course we're going to do that. We're going to be compassionate of that. All you have to do is go neighborhood by neighborhood and you know the reality, coupled with the rising costs of Obamacare is just creating this vortex that is just unpalatable.
LIASSON: The CBO report said those subsidies might increase demand enough to induce some employers to hire more workers or increase their employee's hours. So what about that decline in the number of workers, the finding that got all the headlines? Furman tried to explain that CBO's estimated reduction of 2.3 million workers over 10 years comes from a net decline in the amount of labor that workers choose to supply rather than from a net drop in jobs.
FURMAN: This is a choice on the part of workers and I have no doubt that if, for example, we got rid of Social Security and Medicare, there are many 95-year-olds that would choose to work more to avoid potentially starving. I don't think anyone would say that was a compelling argument to eliminate Social Security and Medicare.
Similarly here, CBO's analysis itself is about the choices that workers are making in the face of new options afforded to them by the Affordable Care Act, not something about firms destroying jobs.
LIASSON: When the CBO did look at the effect on jobs, not just hours worked, it concluded the effects so far are too small to be measured. But the erroneous headlines about jobs lost had been generated and those headlines are guaranteed to end up in campaign ads attacking Democrats this fall. The White House found itself in a familiar position - on the defensive again about Obamacare.
Asked why a reduction of 2.3 million full time workers for whatever reason wouldn't be bad for the economy, Jason Furman said he was certain the net economic effect of the healthcare law would be positive.
FURMAN: Overwhelmingly, the most important factor there is what does it do to the cost of healthcare, and I think the evidence is very clear that it is slowing the growth of the cost of healthcare and in that way is helping the overall economy and raising incomes.
LIASSON: Healthcare costs have slowed since the law was passed and that may or may not continue over time. But in the short term, yesterday's CBO report had a clear political impact, confirming Republicans' decision to make Obamacare and its problems the centerpiece of their 2014 campaign strategy. Mara Liasson, NPR News, the White House. Transcript provided by NPR, Copyright NPR.