Home > Employee Benefits > Is PPACA putting millions out of work? Not exactly

Is PPACA putting millions out of work? Not exactly

capitalbuildingThe folks at the Congressional Budget Office (CBO) are at it again. Their latest number crunching, released Tuesday, February 4th, produced a projection that PPACA will will result in a decline of the workforce by 2 million full-time equivalent workers in 2017. This is a significant jump from their last estimate of only 800,000 fewer full-time equivalent workers due to the PPACA. Adding to those alarming estimates, total hours worked is also expected to decline between 1.5 and 2 percent from 2017 to 2024. Depending on which side of the aisle you fall, the ‘spin’ leads to some differing conclusions. Republicans are concerned that fewer people in the workforce could hurt the economy. Obama claims that PPACA is providing a choice to those who previously didn’t have one – these workers, he claims, are simply choosing to work less. when employees were tied to employers for medical coverage.

Democrats support the CBO position that most of the workers in question will be in the low wage segment of the population. These individuals are likely to give up low paying jobs to avoid losing subsidies or other tax advantages under the law. The White House also points to older workers, nearing retirement, that can now choose to cut back hours or stop working and seek subsidized coverage through the Marketplace system until they are eligible for Medicare.

Republicans feel that the real issue has to do with the inclusion of subsidies within PPACA; basically, anything that gives individuals an incentive not to work is bad policy. For example, Republicans point to food stamps and other social services as crutches. The fact remains that it often doesn’t make financial sense for a person to go out and get a low paying job since they lose out on valuable benefits by doing so. These critics go on to point out that fewer workers vying for jobs often means higher wages that not only hurts businesses but the economy as well.

No one can speculate the true impact that PPACA subsidies will have on our economy. The CBO’s job is to make predictions. Sometimes they are on target and sometimes they are way off. Both sides of the aisle probably have valid points. We won’t really know how this plays out for at least a couple of years. In the meantime, we will likely be peppered with these types of analyses so be ready. My best advice for now – Stay Calm and Carry On!

About the Author

Kathleen McSherry is a Senior Vice President at William Gallagher Associates in the Employee Benefit Group with a core focus on compliance and communications. Her responsibilities include educating clients on applicable local, state and federal regulations affecting their insurance programs and employees. She also acts as a liaison between WGA’s ERISA attorney and the entire benefits department.
617.646.0359 | kmcsherry@wgains.com | Connect with Kathleen on LinkedIn

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