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By Jeff Madrick, originally published on Next New Deal

The attack on the Affordable Care Act by conservative Republicans after the release of the Congressional Budget Office's new report was desperate. Bravo to much of the media for setting the story straight almost immediately. But so strong is the anti-government bias involving social policy that critics hardly stopped to think.

No, businesses were not about to issue a couple of million pink slips, as Senate Republicans put it. Rather, because of the subsidy to buy health care, people could choose to quit their jobs or work fewer hours and lead a marginally better life. Heaven forbid.

And that’s the real rub. Republicans must think this is a new dole for the undeserving. But actually, it’s another example of how perverse and unfair the health care system in America is. In other words, according to CBO estimates, 2 million people or so were basically working so they could get insurance. Working makes acquiring health care cheaper because you are in a group plan and the employer will often help subsidize the price. (Of course, that subsidy partly results in lower wages for the worker.)

Because many Americans work just to get health care, they are locked into their jobs. And this may reduce their desire to bargain for higher wages out of fear of being fired.

A few points should be kept in mind. The determinedly objective CBO is by no means always right. It is a peculiar construction, in fact. The CBO is not allowed to make sensible assumptions about the economy, but instead has to stick to the current law. So it can’t anticipate, except as an exception to the main forecast, a change in tax rates or stimulus. The CBO builds in a recovery from a recession automatically—a clockwork interpretation of what economists know as Say’s law, which holds that economies will bounce back automatically as wages, prices, and interest rates stagnate or fall. This notion was anathema to John Maynard Keynes. The CBO makes absurdly precise projections of events 10, 20, and 30 years out. All the while, it wears the mask of objectivity.

The CBO’s estimate that Obamacare will result in 2 million people or so leaving the workforce, it admits, is “substantially uncertain.” There’s an understatement. Just a couple of years ago, it figured the number to be much less. But it says it did a more comprehensive analysis and included a few more recent studies, mostly about cuts in Medicaid. Some studies show that when a couple of states cut funding for Medicaid, people started looking for work. Other studies show little impact, however.

A subsidy for the poor, as Obamacare is, benefits the poor. As the working poor make more money, however, the subsidy diminishes. They may leave their jobs as a result, now able to afford health care on their own.

The CBO also said, however, that Obamacare “will boost overall demand for goods and services over the next few years because the people who will benefit from the expansion of Medicaid and from access to the exchange subsidies are predominantly in lower-income households and thus are likely to spend a considerable fraction of their additional resources on goods and services.” In contrast, people who will pay the modest increase in taxes to support the subsidies “are predominantly in higher-income households and are likely to change their spending to a lesser degree.”

Just what the doctored ordered for a sick economy!

In addition, the drop in total labor compensation as people quit their jobs will be less than the drop in the number of hours worked. Fewer hours worked but not as much lost in income. Pretty good policy. 

Jeff Madrick is a Senior Fellow at the Roosevelt Institute and Director of the Bernard L. Schwartz Rediscovering Government Initiative.


Image via Thinkstock

Originally posted to Daily Kos Economics on Thu Feb 06, 2014 at 11:52 AM PST.

Also republished by Daily Kos.

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Comment Preferences

  •  See if You Retire You Go On Taxpayer Subsidized (5+ / 0-)

    Social Security instead of earning your living, is what passes for logic on that side.

    We are called to speak for the weak, for the voiceless, for victims of our nation and for those it calls enemy.... --ML King "Beyond Vietnam"

    by Gooserock on Thu Feb 06, 2014 at 11:59:48 AM PST

  •  Since when have Republicans (3+ / 0-)
    Recommended by:
    ShoshannaD, FloridaSNMOM, splashy

    cared about job loss?  Hell, unemployment depresses wages.  They love it.
    They're just upset that "undeserving" people are actually going to have access to health care.

    Reading DailyKos is like getting the newspaper two weeks early. But without the lottery results.

    by jazzmaniac on Thu Feb 06, 2014 at 07:38:58 PM PST

  •  And it would seem to me (2+ / 0-)
    Recommended by:
    NCJan, FloridaSNMOM

    that if folks choose to retire early, visit the kids and grandkids, volunteer, maybe go back to school for a second or third career, might make a little more room for generations coming up.  

    And of course if they choose to continue or if these jobs, such as they are, are passed along to younger folks, more disposable income into the economy.

    Which would only matter if the Republican party actually cared about people or the economy...

  •  Conveniently elided... (0+ / 0-) in every other celebratory Obamacare article, is the fact that those between the ages of 55 and 64 who do not earn enough for subsidies will be required to sign over their houses.  For intance, if they lost their jobs, which has been known to happen these past few years.  

    And that's if they're "lucky" enough to live in a state with Medicaid Expansion.  "Just what the doctor ordered" indeed.  

    Read about it right here on the Kos, if you haven't:

    As so often happens with government largesse, it's great if you happen to be one of the "winners" but the devil can be in the details.

    •  And this is worse than what came before (1+ / 0-)
      Recommended by:


      "If you are cast on a desert island with only a screwdriver, a hatchet, and a chisel to make a boat...go make the best one you can. It would be better if you had a saw, but you haven't." T.Roosevelt on politics.

      by NCJan on Thu Feb 06, 2014 at 08:21:00 PM PST

      [ Parent ]

    •  You mean as opposed to doing without (0+ / 0-)

      Health care at all?

      They could still do without health care if they choose to, and die early, leaving their assets to their children. Just refuse Medicaid.

      Women create the entire labor force.
      Sympathy is the strongest instinct in human nature. - Charles Darwin

      by splashy on Fri Feb 07, 2014 at 12:58:57 PM PST

      [ Parent ]

  •  i have health coverage (1+ / 0-)
    Recommended by:

    hey boss I have health coverage for my family and myself, its a good price and it wont ruin me financially!!!!

    I don't like how you treat me at this job.

    SOOOOOOOO kiss my ass.

    "help police" Catch-22 Joseph Heller 1961

    by rageagnstmach on Thu Feb 06, 2014 at 07:58:39 PM PST

  •  But it will make us all lazy! (2+ / 0-)
    Recommended by:
    Celestia89, splashy

    I can't believe that Republicans are actually arguing people will stop working because they can get health care on the open market.

    They are actually saying that the ACA gives people a chance to be slackers!

    What do they think? Yay! I can pay for health care, so now I don't need to work, because screw food and shelter?

    Someone should tell Republicans:

    1. When one adult member of a family takes a part time job to better care for younger kids and older parents, this is not slacking off.

    2. Adults over 55 who want to work fewer hours in less stressful jobs in order to better manage the chronic health problems that come with age are not slacking off.

    And I can't believe Democrats are not saying these obvious things.

    "If you are cast on a desert island with only a screwdriver, a hatchet, and a chisel to make a boat...go make the best one you can. It would be better if you had a saw, but you haven't." T.Roosevelt on politics.

    by NCJan on Thu Feb 06, 2014 at 08:16:54 PM PST

    •  Had an old fart in my office today (1+ / 0-)
      Recommended by:

      He was spouting this very thing. Certain that welfare and food stamps are more lucrative than working. Must have been a story on Faux Snooze today. I tried to argue but the mind was closed. I even tried, "some people may quit their jobs and start their own business."  His reply? "Most people are too stupid to start their own business."

      I gave up.

      "So oftentimes it happens that we live our lives in chains, and we never even know we have the key." --Robb Strandlund and Jack Tempchin

      by Celestia89 on Thu Feb 06, 2014 at 09:21:35 PM PST

      [ Parent ]

  •  Overheard comment from an employee (1+ / 0-)
    Recommended by:

    Gee, I'm having to re-think when I start feeling sick, I can go to the Doctor now and not just tough it out.

    ... the watchword of true patriotism: "Our country - when right to be kept right; when wrong to be put right." - Carl Schurz; Oct. 17, 1899

    by NevDem on Fri Feb 07, 2014 at 12:06:18 AM PST

    •  "Tough it out" may be a sign of Cancer or any (1+ / 0-)
      Recommended by:

      number of illnesses that would better respond to care earlier that later when death is fast and furious.

    •  That will be the hardest thing for many (0+ / 0-)

      Who have just always toughed it out.

      My spouse fell victim to that, and died. So used to toughing it out that we tried to figure it out ourselves and figured wrong.

      It's depressing.

      Women create the entire labor force.
      Sympathy is the strongest instinct in human nature. - Charles Darwin

      by splashy on Fri Feb 07, 2014 at 01:01:12 PM PST

      [ Parent ]

  •  When my brother was dying of cancer last year, (1+ / 0-)
    Recommended by:

    he had to keep working almost until the end in order to keep (and pay for) his health insurance, even though he was very sick.  Obamacare makes things a bit better, but I wish health care were free, so that no one had to work to pay for it when they are really ill.

    The Republican view is evil.

  •  Obamacare will kill you (GOP) or make you rich, (0+ / 0-)

    free and immortal (apologists for poor, poor  roll out and portaits of the facts).  It's only what all industrialized societies have so let's not overreach and over preach.  Can all Americans get signed up, then they can say no to care when they are in crisis, if they wish.  But without decent health care coverage that decision is left to chance and you rest in the arms of Death way more than you think.  There is nothing like a good Primary Care doctor to advise you, so you can decide on your own fate and care.    You may get sick and die because of the lack of solid health care and for no good reason or because some political axe grinder would not grow up and stop taking unlimited dollars for peddling the lie that you don't need health care coverage and if you do you are unpatriotic.

  •  They act as if. . . (1+ / 0-)
    Recommended by:

    those 2.5 million people leaving their jobs leaves a great black hole behind to never be filled. I am sure a whole lot of people will look at that job vacancy and say to themselves, "that's exactly what I have been looking for".

    Why did the CBO not examine that scenario?

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