What is the CBO actually saying about the ACA?

The Congressional Budget Office (CBO) released a report on the Affordable Health Care Act (ACA) which has stirred some debate between Democrats and Republicans. There is a specific section that most news agencies are quoting. I've taken that section and attempted to boil down the language in an attempt to better understand what exactly is being said.

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.

[Employment will increase but at a lower rate because of the ACA.]

The decline in full-time-equivalent employment stemming from the ACA will consist of some people not being employed at all and other people working fewer hours;

[CBO starts by stating that there is in fact a decline in full-time employment as a result of the ACA. They further qualify that statement by indicating that this loss of full-time employment is the result of some people not being employed and others having part time employment.]

however, CBO has not tried to quantify those two components of the overall effect.

[they didn't bother to crunch the numbers]

The estimated reduction stems almost entirely from a net decline in the amount of labor that workers choose to supply,

[people have chosen to either stop working or work fewer hours]

rather than from a net drop in business’ demand for labor,

[those people weren't fired or moved to part-time status by the employer]

so it will appear almost entirely as a reduction in labor force participation and in hours worked relative to what 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).

[It might look like fewer jobs or hours are available but actually it's because people chose to cease employment or voluntarily reduce hours.]

Ultimately this particular section of the CBO report dealing with the ACA hasn't presented it's findings in a very clear and concise way or included additional information to explain the findings. I suspect that this is the reason why there is some debate on the actual interpretation of the findings.
Taking a broader view of the information presented and taking into account my own interpretation I feel I can present what I conclude is being said.

The ACA is not causing employers to reduce worker hours or reduce jobs available. Instead the ACA is causing workers to either seek other means of employment or reduce hours. This means that the ACA is causing people to choose different employment options. So overall the ACA is in fact the cause of a change in employment status but it appears to be some indirect cause that I haven't seen the CBO actually identify.

Now that I've given my rendition of what I think this portion of the CBO report is actually saying I'm going to illustrate a few points that come to mind.

If it's true that some people have chosen to cease employment or reduce hours voluntarily, then I have to wonder why. I infer that somehow the ACA is to blame for this but this particular section of the CBO report hasn't given any reasoning as to why this is the case. I could venture a guess that some employers may have stopped offering over-time hours to cut costs because the ACA has increased over-head. This could cause some workers to change to working two part-time jobs in an attempt to work extra hours and make more money. Even if they aren't making over time pay, 50 hours or more of work is still better than only 40. It's may also be possible that workers that stop employment at a specific company may have done so in order to seek better employment elsewhere for the same reasons. Again, this section of the report doesn't actually give any specific reasoning why anyone would voluntarily leave a job or reduce hours.

The CBO indicates on their website that they are a bi-partisan entity that offers independent analysis. I wonder if they tried to obfuscate some conclusions specifically so the CBO can't be said to be taking one side or the other. Ultimately I feel that the conclusions reached by the CBO indicate that claims by both the Republican and Democratic party about the ACA in relation to employment are both wrong. While is seems that the ACA has caused a change in employment status for workers, it isn't something that employers are doing. So while the Republican party has claimed that the ACA has caused employers to change employment status of workers this report indicates that is is a invalid claim. However, the claim that the Democratic party has that the ACA has not caused ANY change in employment is also incorrect.

So that's what I think the report is actually saying. I welcome any further thoughts or additional insights that anyone chooses to provide.

I watched the CBO hearing on this today. It was on CSPAN.
I listened as this section was explained again and again.
It just does not make since.
I do not know anyone who would actually "chose" to quit working or cut their own hours because they sign up for the ACA.
The entire time it was like he was spinning the report.
I got the feeling that perhaps the CBO may not be as independent as it is supposed to be.
It really irritated me when he was explaining that with less people working the job market would expand (this I understand to a degree but the next part is the kicker) with less people in the employment work force the deficit will lower in spite of the fact there will not be as much tax revenue.
I see this absolutely destroying the middle class.
Quad

some people might be worrying about the subsidies and tax credits.

higher income means less of the above.

that's what the "report" might be looking at.

Subsidy Calculator

people on the edge of a notch might actually want to work less hours to get a higher net gain.

this is one pitfall of the law.

it puts people between a rock and a hard place too often.

When your talking the 21K range of income that's damn close to welfare and food stamps depending on how many people in the family so when you bump up a few thousand in income and the ACA subsidies are gone you end up with less overall.

When people figure that out, as so many already have, they hit the lazy gravy train.

The tax base can't help but go away and soon enough there is no gravy for anyone except the political thieves that created this socialist utopia.

Their argument is simple.

Because of the ACA workers are no longer "Job Locked" due to only being able to afford Healthcare through an employer.

This means they can do such fun stuff as retire, move to part time work or even start that little dog walking business that they've always dreamed of.

Of course, with one vacancy to every three unemployed, their numbers seem a little optimistic. Still, it's a step in the right direction.

reply to post by Quadrivium


After reading your response I did go back and was able to watch a video presented on CSpan that you referenced. I was able to gather that some people left the workforce in part to those workers choosing to retire. The other aspect was that because of the ACA and the subsidies, that an increase in wage ended up being an overall smaller take-home pay.
To further illustrate this, I offer this basic example.
Before the ACA, an increase in pay might mean a higher tax bracket. There might be an overall increase in take-home pay (take home pay being the amount after taxes and an any other deductions.) by 5%. After the ACA took effect this amount was reduced to about 2% because a higher tax bracket meant less of a workers health insurance was subsidized.
This would then account for a reason why a person may go to a part time job. So while the ACA didn't actually cause employers to reduce worker hours or decrease the number of jobs available, it did end up having the same effect. The CBO report also seemed to indicate that some programs that garnered a high dollar amount to sustain them, were part of the problem in causing the national debt to have a long-term negative effect. However, according to the video, the ACA did also allow the job market to expand. From what I gather this is due to the effect of people being more free to change jobs where previously they may have chosen to stay for the health benefits. From my perspective it simply added more fluidity to the overall job market but didn't actually do anything to create new jobs.
Aside from the ACA, I did note that the CBO report also seemed to indicate that more people were retiring than there were people joining the workforce. I realized that the report seemed to be taking into account unemployed workers that were actually retired. This seems to actually skew the true results some.

My original post was based on text that I found in the washington post as well as several other news outlets that I believe is taken directly from the report itself. The video I watched was more of a question and answer session dedicated to examining aspects of the report but was not an actual full presentation of the report itself. So far, I haven't found any publicly available copy of the actual full CBO report.

reply to post by Myth024


Another looming "Tax Bracket" problem is the whole employer paid insurance thing.

Remember that what your employer pays for your insurance for your benefit is not considered taxable income.

As employers start to drop policy coverage (and even if they give a raise to help you), employees will be taxed for the extra income now, and will have to pay for insurance themselves and may not be able to write off the amounts paid.

Perhaps that is one hidden agenda with ACA.

With the S.S. and Medicare financial shortfalls, maybe this is designed to ultimately steer people into paying more.

Maybe that's one reason why the White House is talking about "free agent" employees all of a sudden in response to the CBO report.