Jumping On—And Off—The CBO Report Bandwagon

In its February 2014 report to Congress, The Budget and Economic Outlook: 2014 to 2024 (see Appendix C: Labor Market Effects of the Affordable Care Act: Updated Estimates) the nonpartisan Congressional Budget Office created quite a stir last week as it reported 2.5 million individuals will leave the labor force by 2024.

A number of the nation’s media intelligencia pounced on the report as an opportunity to provide evidence of the Affordable Care Act’s real, underlying threat to our economy. Trouble is, they got it wrong. Entertainment networks like Fox News had the bandwagon gassed up and ready to roll, so all that Republican candidates and lawmakers had to do was jump on board (see video below). By now most have hurriedly jumped right back off because of the simple practicality that when someone leaves a job the job does not disappear – at least not immediately.

Now, the broader, long-term impact on overall economic growth due to the contraction of personal income is a legitimate debate, but that calls to mind an entirely separate issue: politics aside, has anyone stopped to think how utterly ridiculous it is to try and support that 2.5 million number? How many subjective assumptions had to be made in order to determine who would and would not leave the workforce? And how do you possibly define what it means to leave the workforce anyway in lieu of the inherently transient nature of today’s labor markets?

In the report the CBO states that it was already once way off its “estimate” just a few years ago:

“CBO’s estimate that the ACA will reduce aggregate labor compensation in the economy by about 1 percent over the 2017–2024 period—compared with what would have occurred in the absence of the act—is substantially larger than the estimate the agency issued in August 2010.”

“In 2010, CBO estimated that the ACA, on net, would reduce the amount of labor used in the economy by roughly half a percent—primarily by reducing the amount of labor that workers choose to supply. That measure of labor use was calculated in dollar terms, representing the approximate change in aggregate labor compensation that would result. Hence, that estimate can be compared with the roughly 1 percent reduction in aggregate compensation that CBO now estimates to result from the act.”

In other words, in three years they doubled their estimate. That’s what they call it, an estimate. I would argue you can only estimate that which already exists, so it’s really a projection or forecast – an a pretty meaningless one at that.

Still others have sought to bend the report findings as driving individuals out of the labor force. The ramifications of that of course being more slackers on the dole sucking on the teats of the shrinking middle class rather than working for a living like the rest of us. Right. See the Washington Post’s article, They quit their jobs, thanks to health-care law.

I agree there is reason for deep concern about how to break free of the psychological conundrum we have created with the US welfare state. Personal responsibility should be a mantra of any candidate running for political office – beginning with themselves would be a refreshing change. Working to support yourself and your family should be a socially supported sense of pride – not looked on as being misfortunate you aren’t poor enough for the handouts. But no one should ever have to make the choices that individuals in this country have had to historically because they lack affordable access to quality healthcare. That’s not pushing someone out of the labor force – it’s recognizing the value they have as a human being.

And here’s another sobering thought. The demand for at home services by an aging population with chronic disease and long-term disabilities is going to skyrocket. Since there is virtually no likelihood that additional funding will be available to increase the amount of home care services provided under Medicare or Medicaid, it would be very beneficial to have affordable healthcare in place for the millions of informal caregivers being driven out of the labor force because they choose to provide those services and support to a parent or elderly loved one.

Cheers,
  Sparky