CBO On Job Loss From Health Reform

After trashing the Congressional Budget Office (CBO) for producing “garbage” reports about the deficit reductions in the Affordable Care Act and the GOP measure to repeal it, Republicans are now touting this video of CBO Director Doug Elmendorf apparently agreeing with their premist that health care reform will destroy jobs:

REP. JOHN CAMPBELL: Thank you, Mr. Chairman, we’ll — and Dr. Elmendorf — and we’ll continue this conversation right now. First on health care, before I get to — before I get to broader issues, you just mentioned that you believe — or that in your estimate, that the health care law would reduce the labor used in the economy by about 1/2 of 1 percent, given that, I believe you say, there’s 160 million full-time people working in ‘20-’21. That means that, in your estimation, the health care law would reduce employment by 800,000 in ‘20-’21. Is that correct?

ELMENDORF: Yes. The way I would put it is that we do estimate, as you said, that…employment will be about 160 million by the end of the decade. Half a percent of that is 800,000.

Watch it:

The video cuts there, so I’m not sure if Elmendorf clarified the claim, but the CBO’s presentation on this matter suggests that the job loss claim is far more benign than the GOP would have you believe. First, in this presentation delivered at the Schaeffer Center of the University of Southern California in October of 2009, Elmendorf suggests that effects on employment would “probably be small.” “The legislation will affect some individuals’ decisions about whether and how much to work, and some employers’ decisions about hiring workers. We estimated that the legislation, on net, will reduce the amount of labor used in the economy by roughly half a percent, primarily by reducing the amount of labor that workers choose to supply.”


In other words, CBO believes that increasing access to health insurance could lead some people who are working to maintain access to health coverage to retire early or “take jobs that better match their skills, because they would not have to stay in less desirable jobs solely to maintain their health insurance.” Under the law, those individuals would be able to find coverage through the exchange or Medicaid.

What percentage of Americans would actually choose to do this, is of course unclear (Medicaid, after all, has only a 65% participation rate and CBO admits “overall impact on labor markets, however, is difficult to predict”), but leaving a job that you’re at simply because of the health coverage it provides is certainly different than businesses closing shop because of any mandates or new regulations.