The Corner

Obamacare and Work

Kevin Glass highlights the CBO’s latest take on this subject:

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.

Much of the debate over the effect of Obamacare on work has concerned how we should think about the possibility of de-linking health insurance from employment. Some liberals have argued that it’s a good thing that Obamacare reduces labor force participation: People shouldn’t be “locked” into jobs they hate because it’s the only way they can get health insurance. But CBO has never said that reducing job lock is the main way Obamacare reduces employment. It has consistently pointed out that the structure of Obamacare’s subsidies acts as an implicit tax on work, and thus causes people to work less. It’s hard to see much to cheer in that.

Ramesh Ponnuru — Ramesh Ponnuru is a senior editor for National Review, a columnist for Bloomberg Opinion, a visiting fellow at the American Enterprise Institute, and a senior fellow at the National Review Institute.

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