CBO: Obamacare Will Cut Worker Hours

In its latest U.S. fiscal outlook, the nonpartisan Congressional Budget Office said that Obamacare would cause some low-income workers to limit their hours to avoid losing federal subsidies that the Affordable Care Act (ACA) provides to help pay for health insurance. The cutback in work hours would be the equivalent of 2.5 million jobs in 2024.

The CBO report cited older workers as one example, saying some nearing retirement could decide to keep their work hours shorter to maintain healthcare subsidies until they qualified for Medicare. The report also said assistance would "reduce incentives to work" and pose an "implicit tax on working" for those returning to a job with health insurance.

According to the report, federal subsidies can be substantial, particularly for lower-wage workers who receive more under the law's sliding income scale. But that also means the benefits can be phased out as a worker's income rises.

The biggest impact would begin in 2017, CBO said, because major provisions of the law, including an expansion of the Medicaid program for the poor in half of the 50 U.S. states, will be well under way by then. The CBO said there would be smaller declines in work hours that would occur before then.

Work hours would be reduced by the equivalent of 2.5 million jobs in 2024, said the agency, which earlier predicted 800,000 fewer full-time jobs by 2021. The bottom line would be a slower rate of growth for employment and compensation in the coming decade, according to the report.

Partisan Divide

The report findings will likely provide ammunition for partisan attacks during the upcoming congressional election cycle. Obamacare was unpopular with many voters before its botched October rollout. A month later, Obama weathered one of the biggest political blowbacks of his presidency as millions of people received notice that their health plans would be canceled because they did not meet the law's new standards.

Republicans, who have already made Obama's Patient Protection and Affordable Care Act a top campaign issue for November, seized on the CBO report to press their argument that Obamacare is putting a damper on jobs growth and the economy.

"The president's healthcare law creates uncertainty for small businesses, hurts take-home pay, and makes it harder to invest in new workers. The middle class is getting squeezed in this economy, and this CBO report confirms that Obamacare is making it worse," House of Representatives Speaker John Boehner said in a statement.

The CBO said Obamacare would enroll 1 million fewer uninsured Americans than initially expected as a result of technical glitches that largely paralyzed the federal website HealthCare.gov in the first two months of open enrollment.

In a fresh forecast for 2014, the CBO estimated that 6 million people would sign up for private coverage through new health insurance marketplaces, down from an earlier forecast of 7 million. But the report predicted that the program would eventually overcome the deficit, signing up 24 million people by 2017.

The Obama administration says the health insurance marketplaces now operating in all 50 states and the District of Columbia have enrolled about 3 million people in private coverage so far, with volumes increasing following major fixes to HealthCare.gov.