CBO: 2 million to quit jobs, reduce hours because of ACA

A report released this week by the nonpartisan Congressional Budget Office concludes that more than 2 million Americans who would otherwise  rely on a job for health insurance will quit working, reduce their hours or stop looking for employment because of new health benefits available under the Affordable Care Act (Source: “Health-care law will prompt over 2 million to quit jobs or cut hours, a CBO report says,” Washington Post, Feb. 4, 2014).

On the other hand, The CBO report also found that there was little evidence that businesses will significantly reduce head count or hours as a result of the law. Futhermore, the CBO projects that the law will reduce the number of uninsured Americans by 25 million when it is fully implemented.

The CBO predicts that the economy will have the equivalent of 2.3 million fewer full-time workers by 2021 as a result of the law — nearly three times previous estimates. After obtaining coverage under the health-care law, some workers will choose to forgo employment, the report said, while others will voluntarily reduce their hours. That is because insurance subsidies under the law become less generous as income rises, so workers will have less incentive to work more or at all.

The design of the subsidies — like many programs in the social safety net — represents “an implicit tax on additional work,” CBO Director Douglas Elmendorf said.