Health Care Law Projected to Cut the Labor Force

http://www.nytimes.com/2014/02/05/us/politics/budget-office-revises-estimates-of-health-care-enrollment.html

by wikiburner • 12 years ago

25 89 12 years ago

tking8924• 12 years ago

I think its important to note their correction:

"An earlier version of a headline accompanying this article on the home page was incorrect. The health law is projected to result in a voluntary reduction in the work force equal to 2.5 million full-time workers, according to the Congressional Budget Office, not two million fewer jobs."

coldcode• 12 years ago

Seems like a rather glaring error to make. It's a huge difference between retirees and the unemployed.

300bps3• 12 years ago

I think it would also be a glaring error to assume these are retirees. What evidence do you have that they are retirees and not 30 year olds that are purposely holding back productivity because of the incentive the government is now giving to not work?

brohoolio• 12 years ago

This is expected. There is a whole class of people who are working just for insurance because it was prohibitively expensive on the open market for individuals. If you make it affordable for them to purchase healthcare as individuals they'll retire.

Hopefully it means that people who want to work will be able to back fill those jobs.

I think it's a good thing for the economy. It can't be a good thing to force individuals to work when they'd have the means to retire if they were able to purchase healthcare at the same rates as large companies.

hga11• 12 years ago

Nit: large companies purchase healthcare itself, and have specialist companies administer it, including I'm sure arranging the usual negotiated rates. They're big enough to do their own pooling.

Individuals have to buy insurance, because only a combination of them can form a (large enough) pool.

And I note that your analysis that this is good only holds in a situation like today, where there's a labor surplus. In the future it could be a very bad thing, especially if individuals in otherwise productive parts of their life don't work and therefore don't pay for the Baby Boomers' retirement promises like Social Security and Medicare.

ADDED: one thing we can be very sure about this law: there's going to be a bunch of "UNINTENDED consequences", and some of them will be bad. Some are likely to be very bad; one thing recently remarked on is that VCs are pulling back sharply from funding biomedical ventures, right now due to uncertainty, but things like the medical device tax are a component of that, and of well documented existing company retrenchment.

fbags6• 12 years ago

One other thing we can be very sure about this law: there's going to be a bunch of "unintended consequences", and some of them will be good. Some are likely to be very good.

Shivetya• 12 years ago

It won't be a good thing for the economy, more people on the dole is never a good solution. The ACA was only going to "work" if it had enough healthy workers paying into it, having larger numbers of unsubsidized players.

With so many dropping into the clearly subsidized roles this will push the costs of the program up. With the guarantees to the insurance companies built into the law the public will end up footing an even larger bill which requires increase taxes and health care costs for those working putting a bigger drag on the economy.

Having more part time jobs which is what will happen when the employer side of this kick is not better that keeping full timers.

rch• 12 years ago

The hope is that we will observe an increase in real wages at the bottom end of the scale, which will have a very positive effect on the economy. This is evidence that people have been effectively trapped in jobs just for the healthcare.

I actually worked with someone (who knows python, JavaScript, c#, t/sql, etc.) who had to work loading boxes at UPS on the night shift while he was between jobs because, while he could afford to quit and look for a new job, he couldn't afford a gap in his insurance. It's not that he was sucking down tons of services either - just having a gap would have been bad news.

Now I hear that jobs at Whole Foods and Starbucks are pretty good all around, but there are others that I think will rightly need to pay more going forward.

scarecrowbob3• 12 years ago

Well, take my wife (please): she was working as an employee, taking a job that could have been done by someone else (teaching orchestra at a school), and then we moved and she started a business (private violin studio). While she makes more as a private teacher, prior to the ACA she was previously unable to purchase health insurance on the private market due to a food allergy (a precondition).

We had to move for other reasons than her job, but consider that there are many people doing work that other people do, who are motivated to do things like start a business, but who are otherwise unable to do so because of the US healthcare system.

Additionally, consider my parents, who are also working not because they need the income per se-- they could retire and live well-- except for the costs and difficulties of purchasing health insurance on a private market.

So it isn't the case that people are just universally "going on the dole"... making private insurance closer to the same cost to purchase health insurance regardless of your status as an employee shouldn't affect the overall bottom line of the leeches who provide insurance.

rtpg5• 12 years ago

With the guarantees to the insurance companies built into the law the public will end up footing an even larger bill which requires increase taxes and health care costs for those working putting a bigger drag on the economy.

I don't get it. If we are footing the bill, then it will make higher taxes, but if the insurance companies foot the bill then health care costs increase. There's no reason for both to rise (unless we subsidize the insurance companies through taxes on the insurance companies...)

AutoCorrect• 12 years ago

But then again it can't be a good thing to reduce the income of the young just so the old can retire earlier.

rtpg5• 12 years ago

This title will be read by people and a lot will interpret it as 'less jobs'. But the exact opposite will happen: Some people will work less, so more people will need to be hired. Plus wages will have to go up to account for the shortage.

In a way, the ACA is creating jobs. Or at the very least, it'll increase wages. That's a selling point.

EDIT: I thought I wrote the "increasing jobs" in a "wouldn't it be funny if this were true" sort of sense, guess I didn't.

As for the wage increase, Business insider seems to think so at least (http://www.businessinsider.com/the-buried-lede-in-the-cbo-re...).

Fuxy• 12 years ago

I thought that was the case. They phrased it so badly i actually quit reading it in the middle because it was giving me a headache.

Loss of working hours for businesses does not mean loss of jobs it means finally people can work decent hours and employers can't take advantage of them as easily.

angrybits2• 12 years ago

Not everyone is salary. Hourly people tend to want all of the hours they can get, since it results in more income.

yummyfajitas4• 12 years ago

Your interpretation of the article is not supported by the body. If the CBO believed in the effect you postulate, they would not predict fewer jobs (more precisely, reduced effort equivalent to fewer jobs).

According to the body, hours worked and full time employment will drop. This is a straightforward supply shock, along the same lines as the oil shortage of the 70's (assuming of course you believe in reducing the entire economy to 2 graphs, as the Keynesians often do).

Also, increasing wages in a recession is a big no-no if you believe in Keynesian economics. Assuming this effect is not taken into account by the CBO's headline number, it means there will be further job losses.

dragonwriter4• 12 years ago

If the CBO believed in the effect you postulate, they would not predict fewer jobs.

They're predicting a smaller labor force (non-institutionalized population of working age working or actively seeking work) resulting from the reduced health insecurity from the ACA, not fewer jobs. [1]

To see where that fits into the unemployment picture, understand that the unemployment rate is (1 - (Filled Jobs / Labor Force)).

Also, increasing wages in a recession is a big no-no if you believe in Keynesian economics

We're not in a recession. We're in an expansion in which both wages and employment rates have recovered slower than normal -- which was also true in the last expansion between the 2001 recession and the Great Recession -- which is why it feels like we've been in a 13 year recession to many people who aren't major capitalists, though there have only been 26 months of official recession in that period.

[1] The ACA effect is described on p. 14 of the report [2], which is linked from the NYTimes article, in the section under the heading "Labor Force Participation" (heading on p. 13).

[2] https://www.cbo.gov/sites/default/files/cbofiles/attachments...

heydenberk2• 12 years ago

People who would otherwise spend time with their families, friends, hobbies and side projects will no longer be forced to work more hours at their jobs. Others who don't have full-time jobs will have an easier time getting them. Some good news for once.

angrybits2• 12 years ago

These are houly people that need the hours to make ends meet. They are being forced into part time so that they aren't eligible. This is definitely a net negative, but not the least bit surprising.

heydenberk2• 12 years ago

You may not have read the article of the CBO report.

throwwit• 12 years ago

Part time jobs have already been leveraged by companies to reduce obligations. I'm not sure if there's much left to squeeze out at this point.

joshuaheard• 12 years ago

The economy is a measurement of the productivity of the workers. By cutting 2 million man/hours, or whatever metric they use, you are cutting the economic productivity that much. So, it will hurt the economy no matter how you spin it.

Further, it is not like they are getting health care due to an efficiency in the system. The government is taking resources from the productive (taxes) and giving it to the unproductive (subsidies) in order to purchase insurance. This will further erode economic productivity.

byoung25• 12 years ago

I wonder if they have estimates on how many of those hours will move to the shadow economy as workers just work more hours for cash under the table.

CWuestefeld11• 12 years ago

Few or none. The economic effect that the study is showing is not an increase in unemployment.

What they're expecting is that fewer people will be motivated to work (or to work a second job, perhaps). Imagine someone self-employed who also works part time to get medical insurance benefits; with PPACA he wouldn't need to do this any longer. On the other hand, imagine someone who was working just to supplement the spouse's income. With PPACA's subsidies, the extra income (within certain ranges) becomes a liability, and it makes more sense for that person to stay home without the earned income, enjoying the healthcare subsidy instead.

So this doesn't say anything about unemployment (as it's commonly defined).

mchristo34• 12 years ago

This reflects a misunderstanding of the study, the article written about the study, the words "productivity", "economics" and the phrase "economic productivity". Jesus christ.

michaelochurch• 12 years ago

Correction: February 4, 2014 An earlier version of a headline accompanying this article on the home page was incorrect. The health law is projected to result in a voluntary reduction in the work force equal to 2.5 million full-time workers, according to the Congressional Budget Office, not two million fewer jobs.

If true, this is a good thing. We, as a society, don't need "jobs" or hours worked. We need stuff made. Voluntary attrition of the least productive 5-billion person-hours per year won't hurt us much, but that will cause wages to rise (which will, over time, improve what is produced).

We're already producing a lot of stuff. What we need now is a qualitative focus, serious consideration of sustainability and, above all, better leadership. Taking some pressure off the lower and middle classes (i.e. peeling back the wage serfdom that gives power to feudal strongmen) is a start.

There used to be a Fordist connection between general prosperity and the well-being of businesses, rippling up to the very rich. But the consumer credit boom killed that (sort of). Instead of letting wages rise or prices fall, the poors could be pumped full of loans they couldn't afford to repay. We saw, in 2008, how well that works out, but the fundamental structure of society hasn't changed.

Obama has made many tactical mistakes with the PPACA, and I wish he had started at single-payer to make public-option the compromise, but if "Obamacare" is bringing us back toward a more cooperative, progressive society, then that's a good thing.

rwissmann2• 12 years ago

The whole discussion is baffling. The US health care system consumes almost 20% of GDP. That is twice as much as any other developed country - without seeing better health care results.

Making changes to a system that corresponds to one fifth of the annual economic output will obviously have massive consequences. However, it is hard to see how you could possible make the economics of US health care worse. ACA gives more people the ability to individually choose their health care insurance, thus increasing competition and hopefully giving the health care buy side more incentive to drive down prices.

jboggan• 12 years ago

Choosing not to have a certain level of health insurance or any health insurance at all is also a choice. Or rather, it was.

maxerickson4• 12 years ago

One simple way to make health care more expensive with minimal improvements to outcomes would be to devote even more resources to extraordinary measures.

The U.S. healthcare system is not set up to maximize outcomes. I guess I agree that is a problem, but it makes efficiency comparisons less interesting.

Health Care Law Projected to Cut the Labor Force

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