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Democrats Struggle to Reframe Image of Health Law as Job Killers

By John Reichard, CQ HealthBeat Editor

February 5, 2014 -- Democrats faced an uphill struggle in trying to correct mistaken depictions of the health care law as a job killer following the release of a much-debated Congressional Budget Office (CBO) report. They found that they must at the same time show that the law isn't making people lazy.

Democrats had CBO Director Douglas Elmendorf in their corner saying the CBO budget analysis released last week does not show that employers are reducing their demand for labor because of the law. The analysis also does not indicate that the controversial overhaul is causing job loss, he said.

But in making their case at a House Budget Committee hearing, Democrats also had to put the best possible face on Elmendorf's testimony that Americans are going to work less because of the law. They showed no lack of resolve in attempting to do so, suggesting that the fresh avenue of attack Republicans are opening up on the law using the CBO report as a battering ram isn't causing Democratic defections yet.

CBO's analysis found not that fewer jobs will be available because of the law, but rather that some people will choose to work fewer hours.

The CBO report estimates that the health care law (PL 111-148, PL 111-152) will reduce the total number of hours worked by about 1.5 percent to 2 percent during the period from 2017 to 2024. That's almost entirely because Americans will choose to supply less labor because of subsidies extended to lower-income people to buy coverage and the expansion of Medicaid coverage in a number of states under the law, the report says.

That drop in hours worked isn't because employers will reduce their demand for labor because of the law. But CBO says the drop in hours translates to a reduction in full-time equivalent employment of about 2 million in 2017, rising to about 2.5 million in 2024.

So CBO is linking the health care law's subsidies and Medicaid expansions to fewer jobs, making it easy for critics of the law to suggest that the report shows the law is causing employers to offer fewer positions when that is not actually the case. And the report also plays into assertions that broader government assistance undermines society by making people less productive.

Committee Chairman Paul D. Ryan, R-Wis., said in his opening statement that the CBO report shows that government policies, "especially the president's health care law, are discouraging work. Washington is making this problem worse. This does not have to be our fate. We need to reverse this decline."

He said the effect will be severe, "as if 2.5 million people had stopped working full time by 2024."

Washington, he said "is making the poverty trap much worse." People at the lower end of the income scale in particular will work less, he said, citing another finding of the CBO report.

"These subsidies, of course, make those lower income people better off," Elmendorf said, "but they do have less of an incentive to work."
Ryan said he's concerned that the health care law, by inducing lower income people not to work, "not to get on the ladder of life, to begin ... the dignity of work, [raising] their income, join the middle class, this means fewer people will do that. That's why I'm troubled by this."

But Democrats sought to portray people working fewer hours as giving deserving people a break. They wondered who exactly would give up attempts to be productive because of the subsidies and the Medicaid expansion.

Rep. John Yarmuth, D-Ky., expressed befuddlement about why his 30-year-old son, who he said has his premiums fully covered by a subsidy to buy private coverage under the health care law, would stop working because of that. "What in the world kind of incentive would he have to not work?" he asked Elmendorf.

"Well, by working of course you have income to spend on many other things," Elmendorf replied.

"I can understand why a 62-year-old under the Affordable Care Act might say, 'I want to retire, and now I can retire because I can find coverage that I can afford,' " Yarmuth said. "I understand that example. I'm trying to figure out an example of somebody who is at the lower end" who would have an incentive not to work, he said.

"You are certainly right, Mr. Congressman, that some of these people would be early retirees as you describe," Elmendorf said. "It's no so much an incentive not to work as less of an incentive to work," he added. The increase in the standard of living they would have by working more hours would be smaller than it would otherwise be, the CBO director said. "They would still have a higher standard of living by working in almost all cases, but the standard of living wouldn't be as much higher," he said.

Elmendorf agreed however that the health law would reduce unemployment over the next several years although he wouldn't go so far as to say that would be the case this year.

Other Democrats asked Elmendorf about sympathy-inspiring examples of people who might be able to work a little less because of the health care law. They gave examples such as a person who works two jobs instead of three, an elderly steelworker working a part-time job to pay for health coverage, or a spouse in a working couple who might be able to work fewer hours and spend more time with a child as a result.

Elmendorf said people in those circumstances might well be among those who choose to work fewer hours, but he said CBO's analysis did not quantify those working less by age or various family circumstances. Nor, he said, did it say how many people would stop working altogether or how many people would continue to work but choose to work fewer hours.

Democrats also enlisted Elmendorf's agreement that other popular forms of social legislation such as the 40-hour work week, an end to child labor and the enactment of Social Security legislation also caused a decline in participation in the work force.

In that vein, the CBO report noted that its estimate "that the ACA will reduce employment reflects some of the inherent trade-offs in designing such legislation. Subsidies that help lower income people purchase an expensive product like health insurance must be relatively large to encourage a significant proportion of eligible people to enroll."

Another Ryan, Democrat Tim of Ohio, took a swipe at his gavel-wielding committee colleague with the same last name.

"There's so many different scenarios that average people around the country are living with right now that ... have struggled to make ends meet," he said. "The pressure put on these families is being reduced now because of the Affordable Care Act.

"I just would like to say there's been an undertone of disrespect at this hearing about 'people just don't want to go to work.' There's always a few people I'm sure" that are like that, he said.

But "for the most part if there's a job that opens up in our town," there are "thousands" of applicants, Ryan said. "I hope we can get away from this idea that 'Oh, nobody wants to work, everybody just wants to get on the dole,' " he said. But with CBO widely viewed as an impartial judge of the impact of the health care law, its findings will make that notion an ongoing challenge for Democrats to dispel.

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