Obamacare will result in 2 million fewer people working in 2025, the nonpartisan Congressional Budget Office estimated Monday.
The budget office, which provides projections about the costs and effects of legislation for Congress, said that the bulk of that reduction in workforce would be due to added taxes contained in the law, including “implicit” taxes placed on people who would lose benefits if they worked more under the law.
Under the Affordable Care Act, “some people would choose to work fewer hours; others would leave the labor force entirely or remain unemployed for longer than they otherwise would,” the working paper published by the budget office says.
The estimate of 2 million fewer people in the labor force by 2025 is smaller than previous projections from the budget office. In the past, it has estimated that the number could be as high as 2.5 million.
Sen. Orrin Hatch, R-Utah, the chairman of the Senate Finance Committee, touted the study as a sign of the law’s flaws. “When the president’s health law hurts the labor force at the same time it increases healthcare premiums and taxes, it’s clear the law is not working for the American people,” Hatch said.
The Senate last week passed a bill repealing the bulk of Obamacare. That legislation is sure to be vetoed by President Obama.
The budget office’s calculations attribute most of the labor-force suppressing effects in the law to its direct taxes, such as the added payroll taxes on high incomes, as well as the implicit taxes created by the phaseouts of the law’s subsidies. But part of the reduction in the labor supply would come about because workers who have new access to insurance outside of work would retire earlier than if the law didn’t exist. Economists say that such workers suffer from “job lock.”
