Obamacare Killing Jobs . . . again
picture hat tip TPM DC
After shown to be wrong by Factcheck.org in its analysis, the Fox News group and Republicans are at it again with a worn out commentary on how Obamacare kills jobs. This time they are using the CBO’s new analysis on the impact of Obamacare. Sometimes, I wish the CBO’s Douglas Elmendorf would simply shut up and keep his calculations and thoughts to himself. From Healthcare taking over the economy which Louise Sheiner and Glen LaFollette debunked and Yves Smith at Naked Capitalism portrayed; to Fair Market Valuation of Student Loans for risk even when Student loans can not be discharged in bankruptcy and make a greater return in default; and now the nebulous wording in a recent CBO report;
“The reduction in CBO’s projections of hours worked represents a decline in the number of full time-time equivalent workers (page 117) of about 2.0 million in 2017, rising to about 2.5 million in 2024.”
What this really means is Labor can work fewer hours as a result of Obamacare causing healthcare insurance to be less costly. The number of hours needed to work would decrease 1.5 to 2%. People may want to work less and it sounds like they will opt to work less. The Republicans and Tea-baggers (their right of right brothers) just made their own version of the CBO’s report. The entire blog-o-sphere is laughing at Fox News and the Republicans with their obvious effort to distort the report.
run75441 says: “What this really means is Labor can work fewer hours as a result of Obamacare causing healthcare insurance to be less costly”.
So, when Americans work fewer hours, they get the same or more health care? Does health care just materialize out of thin air?
Maybe, there will be more consumption of health care and less consumption of everything else, for a net loss, to reduce living standards.
Or, maybe, there will be less actual consumption of health care (reduction in quantity and/or quality). That would make it less costly.
And, of course, incentives matter.
“CBO estimates that the ACA will reduce the total number of hours worked, on net, by about 1.5 percent to 2.0 percent during the period from 2017 to 2024, almost entirely because workers will choose to supply less labor—given the new taxes and other incentives they will face and the financial benefits some will receive.”
just because a percentage of workers decide to work less hours does not mean that hours worked in the aggregate will fall…if someone quits their extra job, whoever they had been working for will just hire someone else…the only way ACA could cause a reduction in hours would be if there were a labor shortage…we are no where near seeing a labor shortage, dont look to be anytime soon…
RJS, there are many incentives and disincentives in Obamacare that amounts to a destruction of potential output.
The CBO stated: healthcare subsidies…would “reduce incentives to work” and pose an “implicit tax on working” for those returning to a job with health insurance.
For example, what if someone, who works 60 hours a week and doesn’t qualify for health care subsidies is better off working 35 hours a week and receiving health care subsidies. That’s a disincentive to work.
Also, disincentives are created for firms and the health care industry itself.
Obamacare is not like raising the minimum wage to correct a market failure, it’s creating a failed market.
When you tax something, you get less of it, and when you subsidize something, you get more of it. So, you get less success and more failure.
There are much better ways to help low-income Americans, e.g. promoting growth to raise tax revenue. So, government, and the economy, can afford stronger safety nets (e.g. for preexisting health conditions) and higher labor standards (including a higher minimum wage).
Rjs wrote “the only way ACA could cause a reduction in hours would be if there were a labor shortage…we are no where near seeing a labor shortage, dont look to be anytime soon…
Yes, and the same logic would apply when a few more boomers retire a year or two early because they can afford an individual health insurance policy until they are eligible for Medicare. And in that case some underemployed younger person will be able to move up to a better job. (A year or two earlier.)
That would be reasonable. The issue is not that the amount of hours would disappear. It would remain. The issue is workers might choose to work less as they would have their ~$7/hour subsidized by the gov for healthcare. In effect if 40 people gave up one hour of work, one additional person could work. Ever read any Chapman or Sandwichman?
“when you subsidize something, you get more of it”
Yes. And for 40 million Americans it is a blessing.
Yes, it’s a blessing, until the money runs out.
And, that reminds me of what Winston Churchill said:
“The inherent vice of capitalism is the unequal sharing of blessings; the inherent virtue of socialism is the equal sharing of miseries.”
Well, the entire civilized world(outside the US) has managed not to allow the money to run out on healthcare.
In 1944 Winston Churchill, while still prime minister, said that “our policy is to create a national health service in order to ensure that everybody in the country irrespective of means, age, sex or occupation shall have equal opportunities to benefit from the best and most up-to-date medical and allied services available.”
A few years ago, the WHO rated U.S. health care below Cuba. Yet, it rated U.S. health care #1 in labor (doctors, nurses, specialists, etc.) and #1 in capital (hospitals, equipment, technology, etc.).
I guess, you want a health care system, like Cuba, where there’s equal misery.
And, Churchill was also a politician, who had to give the masses what they wanted to get reelected:
Why Churchill Lost in 1945
Beveridge and reform
“Winston Churchill was probably the most popular British prime minister of all time. In May 1945 his approval rating in the opinion polls, which had never fallen below 78 per cent, stood at 83 per cent.
The movement for social reform reached a climax in December 1942, with the publication of the Beveridge Report. The author of this, Sir William Beveridge…He produced what amounted to a comprehensive manifesto of social reform, including social security, a National Health Service, a full employment policy and other advances.
The Beveridge Report, therefore, presented the Prime Minister with a golden opportunity to reinvent himself as the leader of a party seriously concerned with social questions.”
Are you a good Cardiologist?
run75441, I have degrees in economics from CU-Boulder.
So what are you?
Or are you Arthur Eckart
“Arthur Albert Eckart is the founder and owner of PeakTrader. Arthur has worked for commercial banks, e.g. Wells Fargo, Banc One, and First Commerce Technologies, during the 1980s and 1990s. He has also worked for Janus Funds from 1999-00. Arthur Eckart has a BA & MA in Economics from the University of Colorado. He has worked on options portfolio optimization since 1998.”
Also a couple of degrees from CU Boulder. Are you that talented?
PeakTrader states, “Yes, it’s a blessing, until the money runs out.”
I’m not sure how this could happen. Even if it were possible to run out of money, it seems to me that the critical supply is not of money, but health care goods and services. Is PeakTrader implying that our economy will be unable to supply the goods and services required to meet the health care needs of all our citizens?
“The entire blog-o-sphere is laughing at Fox News and the Republicans with their obvious effort to distort the report.” Yeah, and add Dana Milbank and Chris Cillizza to the list of those being laughed at.
And these are the Washington Post’s top political-analyst journalists. Uh-oh.
Doesn’t mean a whole lot that the US has the best doctors, nurses and facilities in the world when the majority of Americans will never see them.
No question in my mind I would rather be seriously ill in the US then anywhere else. Then again, I can pay for my treatment.
You should try and figure out which party in post war Britain supported the entire Beveridge Report instead of saying something inane like Churchill’s support of some of it caused his defeat.
The party that fully supported that report was the party that won.
“Well, the entire civilized world(outside the US) has managed not to allow the money to run out on healthcare.”
Japan is oft-cited as critics of the American healthcare system because of its superior WHO outcomes on lifespans and other health statistics to which it compares favorably against the US. And yes, Japan has a national health insurance system. Except the co-pays are 30% for those under 70 years old and high earners above 70, yet the system remains under financial pressure. For the better part of a score, public polling in Japan has cited that roughly 60% of the population believes the finances to be inadequate, and co-pay increases are frequently debated as a way of bringing the system back towards solvency.
Consider also that Medicare is actuarially unsound by a factor of about 3:1, i.e., premiums are about 1/3 of what they need to be to bring the program to actuarial solvency.
Not that your comment was directly related to this, but if we’re going to debate about healthcare pre-payment financing mechanisms it needs to be on honest grounds – not the gaming employed by the Obama administration with CBO to hit some magical number that would sell politically but had no basis in reality (eg the doc fix), and not throwing out comparison to other developed countries without also noting that they have higher structural unemployment and lower structural GDP growth than the U.S, and have public finances that are in even worse shape than the U.S.
I did not detect any current emergencies with Medicare. And didn’t Sheiner and Lafollette claim Healthcare was sustainable at 1-1.5%?
So PeakTrader thinks Churchill and his Conservative Party lost the 1945 election to the Labor Party because Churchill was too liberal?
OK, we know that PeakTrader is either a cardiologist or a hedge fund trader, or both. And we’re certain that he is not a historian.
What is the relevance of actuarial solvency to the sustained payment of Medicare benefits? The Medicare Trust Fund is just a file drawer full of IOUs from the government to itself. Does it matter, in any real way, if those IOUs contain positive or negative numbers?
It seems to me that if the only relevant question is whether the economy will have sufficient products and services to meet the healthcare requirements of the population. If it does, then they will be consumed, if it does not, then some sort of rationing regime will be required.
run75441, it’s cited as an article, at the beginning, and put in quotes.
Beverly, politicians, like Churchill, tend to be pragmatic, which may cause contradictions.
” politicians, like Churchill, tend to be pragmatic, which may cause contradictions.”
Apparently also applies to cardiologists and economists.
Gotta love Peak “it’s cited as an article, at the beginning, and put in quotes”
Course, what he does not mention is that the article is from 2004 and it is about Medicare.
Always nice when you can run the same script. Reminds me of Reagan in 1961.
And he has used it other places also
Run75441 wrote: “That would be reasonable. The issue is not that the amount of hours would disappear. It would remain. The issue is workers might choose to work less as they would have their ~$7/hour subsidized by the gov for healthcare. In effect if 40 people gave up one hour of work, one additional person could work.”
If workers chose to work less because of the subsidized healthcare and replacement workers were available to work the remaining hours, then why should we care? I suppose you could get some difference in a statistical model but what practical difference would it make?
Run75441 wrote: “Ever read any Chapman or Sandwichman?”
No, but I found this website: http://econospeak.blogspot.mx/2009/08/hours-of-labour-12.html
It is heavy slogging and a comment had been left that confirmed that it was not just me.
Linus – it matters a lot from a political capital standpoint. If politicians are handing out BMWs but telling people they only have to pay the cost of a Fiat, of course that’s going to generate political support – especially when people think they’ve actually paid for a BMW and don’t realize the disconnect.
I am in sympathy with your concern about honesty and transparency. I would like to see an honest discussion of the facts on all sides. The subject of this blog is the dishonest distortion of the CBO report. I find that type of blatant distortion, and the “scare rhetoric” about running out of money, Medicare going broke, etc. just as reprehensible as any gaming of the numbers by the administration, or anyone, to gain political acceptability.
EMichael, the article is appropriate and relevant at both places.
You try so hard to discredit things that are credible.
Linus, government doesn’t have to go broke for people to receive less services. Look what happened to many state budgets and the cuts in services over the past few years.
Resources, or money, aren’t unlimited. There are budget constraints. Spending and squandering too much today means less tomorrow, which this deep, long, and unnecessary depression makes much worse.
“Medicare beneficiaries on average pay approximately $1 for every $3 in benefits they receive.”
That’s not a sustainable financing mechanism. It is going broke.