Blog: Obamacare Discourages Work

Statement

The nonpartisan Congressional Budget Office predicts that the ridiculously misnamed "Affordable" Care Act will reduce work. As the agency itself said of Obamacare:

"By providing subsidies that decline with rising income (and increase with falling income) and by making some people financially better off, the ACA will create an incentive for some people to work less."

The Wall Street Journal put it this way:

"A key factor is people scaling back how much they work and instead getting health coverage through the Affordable Care Act. . . . Some workers might decide they were better off working fewer hours because a smaller paycheck might qualify them for Medicaid, the federal-state program for low-income Americans that some states are expanding under the health law, while other workers might eye the law's income-based subsidies toward the cost of private insurance premiums and decide to change their hours to affect their eligibility. Meanwhile, higher-income workers whose tax rates were increased to help pay for the law may also choose to work less, the CBO said."

This is different than saying that the "Affordable" Care Act will lead employers to cut back on hiring by making it more expensive to employ people. It will do that, as a minimum-wage fry cook from Wisconsin told the president just last Friday, relating how his hours were cut back by an employer trying to deal with rising benefits costs. The president said he favored raising the minimum wage, a policy that will make it even more expensive to employ the cook. The president didn't talk about how his health care plan cut the man's paycheck.

No, the CBO is saying, instead, that workers will choose to work less. The White House's hapless economic advisor, Jason Furman, tried explaining to the press that this was a good thing:

"They still have that job; they can still go to that job; they can still do that, but you give them this extra new thing. You can't have made that person worse off. If they make a new choice, it's because they're -- you know -- in economics language, they're optimizing subject to a new constraint."

This is a way of saying that you can go on working, being industrious and supporting your family, maybe even working longer or harder if you want. But you'll get less taxpayer subsidy if you do -- "an implicit tax on additional earnings," as CBO puts it. And if you decide to work less, you will be all right. Other Americans will have to pay more to subsidize you. The White House has a new American dream for you: Forget about working.

Even more damning is the assessment from the CBO that taxpayers will put more toward the Earned Income Tax Credit, or EITC, the "negative income tax" that subsidizes the pay of the working poor. Why? Because of Obamacare, CBO writes:

"CBO now estimates that the wages earned by recipients of the EITC will be lower, which will raise both the total amount of the tax credit and the portion that is refundable."

Obamacare will make the working poor choose to work less. So their wages will fall, and they will be more dependent on the EITC wage subsidy from the government.

The credit was made to encourage work: Up to a point, it rises with each new dollar a poor but industrious person earns. This is good. It backs up the basic human dignity of supporting yourself and your family.

Obamacare works against that. It discourages work and encourages dependency, says the CBO. As I've said before, those who designed this scheme have no idea of the harm they have done and will do to people.

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