Congressional Budget reports distort ObamaCare facts


A brief story illustrates the problem that arises when causation and correlation are mixed together. Take for example the tale of the misguided czar, who noticed that the province in his kingdom with the highest rates of sickness was also the province that contained the most doctors. His solution? He ordered that all of the doctors be shot.

It is for this reason that when the Congressional Budget Office releases a report outlining that the Affordable Care Act will lead to job loss of 2.3 million, as they did on Tuesday, the critically minded reader should be skeptical. Though the political right would have you believe that the law is a job killer, a look at the facts demonstrates the grossly misleading nature of such a claim.

The CBO concludes that the ACA is an “implicit,” or indirect tax on both labor and laborers, which is to say that it will increase the cost of being employed and the cost of employing. The result, according to the CBO, is the loss of 2.3 million jobs over the next 10 years.

First, some context. A misleading interpretation of the headlines would lead readers to believe that over the next decade, 2.5 million workers will be fired, or that 2.3 million jobs will not be offered. Neither of these facts is true. The report argues that people who are currently unemployed and looking to transition to full-time work (now with the benefit of health insurance) will be discouraged from doing so because it would be more effective to seek part-time work and collect a government subsidy for insurance than to seek full-time work and forego the subsidy. Instead, the CBO argues, they will work a job for fewer hours, keeping their pay low enough to qualify for a particular government subsidy.

Then, the political trickery begins. To make those numbers — numbers that are purely measurements of the total number of hours that people who will be already employed will not work — more potent, the good folks at the CBO quantified the reduction in hours they expect workers to work in terms of their equivalent to job loss. The result? An incredibly misleading claim that the law will cause 2.3 million jobs to be lost.

At worst, ACA tampers with the incentive scheme — but does it actually leave workers worse off? Now that we know the law won’t actually cause people to lose their jobs, or even to lower their chances of getting hired, what will it do to them? In other words, compare the law’s proposed change to the status quo, where workers remain trapped in certain jobs for the sole reason that they provide health insurance. The ACA’s pre-existing conditions reform and increased subsidies break the chain tying coverage to certain jobs, and allow more mobility between jobs. The pessimistic CBO calls it “job loss.” But for a worker who would otherwise have to turn down a higher paying job because it doesn’t offer insurance calls it opportunity.

Politically, that’s how the Democrats should explain it: They know that their Republican colleagues have already gotten their super PACs on the phone, and the war machines are roaring away with attack ad after attack ad, preparing to call the law a “job killer.” The best thing the Democrats can do is point out that the CBO report disputes every Republican who said the law would hurt the private sector’s ability to hire, because the CBO shows that it’s blatantly not true — it attributes the “job loss” claim to the behavior of workers, not firms.

When the misguided czar shot the doctors, no one was surprised when overall rates of sickness went up. Likewise, no one should be surprised that the ACA won’t kill jobs.

 

Nathaniel Haas is a sophomore majoring in political science and economics. His column, “State of the Union,” runs Thursdays. 

 

  • Mr. Daniel

    Liberty Minded,

    I am confused:

    1) I tried to use my Anthem Blue Cross coverage to buy a 1978 Pinto from Cal Worthington Ford in Long Beach. Alas, I had to opt for Ford Motor Credit. Apparently, I can only use my insurance for medical services. But I thought…I thought it was “unrelated” to health care!

    2) No, no. The biggest “tax-and-welfare scheme” in history was rolled out in ’88:

    “Congress shall have the power…to TAX and spend for the general WELFARE.”

    Some ivory tower liberal elitist from Princeton proposed that. Socialism has been tearing us up ever since.

    3) Purchasing power of those no longer burdened by crushing medical debts alone may make up for the purported net losses.

    Stay mindful, liberty.

    Mr. Daniel is Rockin’ the School House. Word to the 562.

  • Liberty Minded

    Stop pretending that Obamacare is related to health care. Obamacare is a tax and welfare scheme. News flash – the IRS was in close contact with the Whitehouse for months during the debate and implementation of the PPACA.
    New taxes are extra costs to companies. With money going to taxes, there is less for other things – benefits to employees, reserves, profits, new employees, new equipment, investment, …

    To state that Obamacare will cost jobs is only one factor. It could just as easily cost time, or benefits, or improvements. If it costs $1 dollar to pay the “penalty” per employee, the business will have to either make another dollar to pay (usually businesses need to make $40 in order to create $1 in profits) for it or create $1 dollar in savings in order to stay in business. The easiest way for businesses to save costs is to let weaker employees go.