Primary Sources

Posted: April 8, 2014 by Marner in Uncategorized

Much ado was made yesterday about the CBO’s release of its new Economic Outlook report. If you read the headlines from the usual suspects on the right, you would believe that the CBO said the ACA was a job killer.

Fox News – Cost of ObamaCare: 2.3 Million Jobs

Daily Caller – CBO Triples Estimate of Obamacare work force cuts to 2.3 Million

Washington Times – Obamacare Will Push 2 Million Workers Out of the Labor Market: CBO

Newsmax – CBO: Obamacare to Kill 2 Million Jobs

Townhall – Obamacare Driving Millions Out of Work Force, Price Tag Tops $2 Trillion

Casper mentioned in the previous thread that he prefers primary sources and this is a great example of why. If you just read the headlines, or even the full articles, without examining every word you would think that over 2 million workers’ jobs were going to be eliminated by employers because of the ACA. That is not true and it is not what the CBO said. The Washington Times shows how this is done. Their first sentence is, “Obamacare will push the equivalent of about 2 million workers out of the labor market by 2017 as employees decide either to work fewer hours or drop out of the job market altogether, according to estimates released Tuesday by the Congressional Budget Office.” The Times uses the verb “push” to imply that workers will be forced out of their jobs, but they also say that employees will make the decision as to whether or not to work. The other thing they do in that sentence is say the “equivalent of 2 million workers,” not literally 2 million workers. If 10 workers choose to work 10% fewer hours, that is the equivalent to the loss of one worker. Other than using the verb “push,” this sentence is accurate. The CBO report says, “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…The estimated reduction stems almost entirely from a net decline in the amount of labor that workers choose to supply, rather than from a net drop in businesses’ demand for labor[.]” The rest of the Washington Times article is actually a pretty accurate report, but most of its readers won’t get past the headline.

Matt Yglesias explains who these people are that make up the bulk of those who will choose not to work or to work part-time instead of full-time. They are people who are near retirement, but can’t stop working because they aren’t old enough for Medicare. They are new mothers who want to work part-time or stay at home, but need to work full-time for the health insurance. They are the workers that are doing exactly what Republicans said they wanted them to be able to do.

The other talking point from the right about the CBO report is that it is going to increase the deficit. The CBO said the deficit will initially shrink, but will increase in the out years, assuming no changes to any laws are made. However, deficit projections are still lower than before the ACA was passed. One of the aspects of the ACA that positively impacts the deficit is the Republicans latest target: Risk corridors. In the first few years of the ACA, risk corridors were established to protect the insurance market from wild swings in risk pools. If an insurance company’s pool more costly than they projected when building their rates, the government will pay them the difference. If a company’s rick pool is less expensive, they pay the government the difference. According to the CBO, this is a net plus for the government, as insurance companies will pay more than they receive by $8 billion over 10 years. Put simply, repealing risk corridors, as the Republicans want to do, will increase the deficit even further and increase insurance premiums as insurance companies over-estimate how much their pools will cost in order to protect themselves. The other thing about risk corridors is that the Republicans’ opposition is a new-found principle. They fully supported the exact same risk corridors when President Bush instituted Medicare Part D in 2003.

So, when you see breathless headlines, the best thing to do is to go to the primary source, in this case the actual CBO report, and see for yourself what the truth is.

 

 

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