Congress’s bean-counters have rendered their verdict on Obamacare’s economic impact and it’s not good for the president.
According to a Congressional Budget Office report released last month, the president’s health care law will reduce the number of hours Americans work by 1.5 to 2 percent the equivalent of 2.5 million jobs by 2024.
The White House claims that this is because Obamacare reduces job lock whereby people keep working just for the insurance. So the law helps Americans choose not to work.
Don’t believe it. The CBO report provides proof that Obamacare will make work less rewarding, redistribute income to subsidize non-work and reduce employers’ demand for labor.
Obamacare’s supporters have tried to blunt the 2.5-million-jobs-lost figure by citing the report, which says that the reduction in employment will happen almost entirely because workers will choose to supply less labor.
What’s wrong with voluntarily working less? Isn’t that what we all aspire to?
The law’s cheerleaders stopped their quotation of the report too soon. The CBO goes on to say that people will work less given the new taxes and other incentives they will face and the financial benefits some will receive.
The devil is in the details of those taxes, incentives and financial benefits.
Obamacare provides subsidies for people with incomes of between 138 and 400 percent of the poverty line from $11,670 to $46,680 for individuals and $23,850 to $95,400 for families of four.
Those subsidies decline as one rises from the poor to the middle class. When someone works more and earns more money, he or she is punished with higher insurance premiums and more cost-sharing.
Consequently, some will decide that working more or lobbying for a raise isn’t worth it.
The situation will be similar for the rich. The law hits individuals who make more than $200,000 a year and families with more than $250,000 in income with a 0.9 percent increase in the Medicare tax and a 3.8 percent tax on investment income.
Both levies will discourage people from putting in extra hours in order to avoid crossing those income thresholds. Lower incomes lead to less spending and thus less job creation.
The CBO also identifies an income effect. This happens, in the CBO’s words, because subsidies increase available resources similar to giving people greater income thereby allowing some people to maintain the same standard of living while working less.
In other words, Obamacare uses tax dollars to pay people not to work.
These effects don’t enable free choices. They warp decision-making discouraging lower-income Americans from climbing the opportunity ladder and taxing the well-off to pay for it.