– CBO: Obamacare Discourages Work (ZeroHedge, Aug 29, 2014):
Remember all those allegations that Obamacare would be an unmitigated disaster for businesses, especially smaller companies? Well, now we have some facts. A week ago we noted that the Philly Fed found that Obamacare was a disaster for business, and now no lessor entity than the Congressional Budget Office (CBO) is out with its latest forecasts, concluding “certain aspects of the Affordable Care Act will tend to reduce labor force participation.”
…the CBO does write, though, is that one of the downward pressures on the labor force is Obamacare. As the report finds:
“Over the next few years, CBO expects that the rate of labor force participation will decline about 1/2 percentage point further… the most important of those factors is the ongoing movement of the baby-boom generation into retirement, but federal tax and spending policies will also tend to lower the participation rate. In particular, certain aspects of the Affordable Care Act will tend to reduce labor force participation, with the largest effect stemming from the subsidies that reduce the cost of purchasing health insurance through the exchanges. Because the subsidies decline with rising income (and increase with falling income) and make some people financially better off, they reduce the incentive for some people to work as much as they would without the subsidies.”
We won’t rehash the debate here over whether or not it’s a good thing for the welfare state to provide so much that people will choose not to work – but it’s pretty undeniable at this point that ACA is disincentivizing work for Americans in an era where we’re wondering if the decline in labor force participation is the new normal.
* * *
While we already noted that ‘work is punished’ in America, it appears now that with Obamacare, non-work is actually incentivized.