Stand up for the facts!
Our only agenda is to publish the truth so you can be an informed participant in democracy.
We need your help.
I would like to contribute
Roger Williams says CBO forecasts Obamacare will cost U.S. 800,000 jobs
Republican U.S House candidate Roger Williams of Texas promises to "end the fraud of Obamacare" in a mailer to Austin-area voters we spotted April 11, 2012.
His mailer lists among promises broken by President Obama the notion that the 2010 overhaul of health care laws would create jobs. Under "Promise Broken," the mailer says: "The non-partisan Congressional Budget Office concluded ObamaCare will cost the U.S. more than 800,000 jobs."
Williams’ footnoted backup was a Feb. 11, 2011, blog post on AmericanThinker.com saying that Doug Elmendorf, director of the Congressional Budget Office, had just testified to the House Budget Committee that as of 2020-21, the law was projected to reduce U.S. employment by 800,000.
PolitiFact researchers have explored this testimony and topic before, most recently for a June 2011 Truth-O-Meter article after U.S. Rep. Michele Bachmann said in a Republican presidential debate: "The CBO, the Congressional Budget Office, has said that Obamacare will kill 800,000 jobs. What could the president be thinking by passing a bill like this, knowing full well it will kill 800,000 jobs?"
Broadly, the projection is open to misinterpretation.
The CBO is a nonpartisan agency that provides economic analyses to members of Congress on how legislation will affect the federal budget and the economy. And in August 2010, it published a new outlook that considered the jobs impact of the just-approved health care law.
While the CBO had determined the law would reduce "the amount of labor used in the economy," that was not the same as concluding that 800,000 jobs would be shed.
Let’s begin with the negative effects the health care law could have on employment.
The law was expected to cost some employers money, particularly large ones. Under its provisions, employers aren't required to offer insurance, yet if they don't and their workers make low wages and qualify for tax credits to buy insurance, then the employers will have to pay a fine. (This part of the law takes effect in 2014.) Even so, the CBO has said, fines imposed on large employers will affect low-wage workers the most.
The CBO also projected the effects to be somewhat limited. "To the extent that changes in the health insurance system lead to improved health status among workers, the nation’s economic productivity could be enhanced," the CBO said in its report. "It is not clear, however, whether such changes would have a substantial impact on overall economic productivity or output. Moreover, many of the effects of the legislation may not be felt for several years because it will take time for workers and employers to recognize and to adapt to the new incentives."
Still, that's not where the 800,000 jobs number comes from. It primarily comes from workers who choose not to work because they no longer have to work at jobs just to keep their health coverage.
Here's how the CBO put it:
"The Congressional Budget Office (CBO) estimates that the legislation, on net, will reduce the amount of labor used in the economy by a small amount—roughly half a percent—primarily by reducing the amount of labor that workers choose to supply. That net effect reflects changes in incentives in the labor market that operate in both directions: Some provisions of the legislation will discourage people from working more hours or entering the workforce, and other provisions will encourage them to work more. Moreover, many people will be unaffected by those provisions and will face the same incentives regarding work as they do under current law."
Basically, the CBO was saying that that once some people working mostly to keep their health insurance have other options -- to enroll in Medicaid, or to qualify for tax breaks to buy insurance from a health exchange -- they might choose to work less. The CBO describes this as a "small segment" of the population, about half a percent of the labor force.
Notably, the CBO doesn't use the 800,000 jobs number in its report; critics of the law have extrapolated that number by calculating what half a percent of the workforce equals. Then again, as noted, then-CBO director Douglas Elmendorf confirmed that number in his February 2011 testimony.
Elmendorf also explained, though, that the number was an extrapolation, and might not be precise. He said: "That means that if the reduction in the labor used was workers working the average number of hours in the economy and earning the average wage, that there would be a reduction of 800,000 workers.
"In fact, as we mentioned in the -- in our announcements last summer, the legislation also creates incentives that might affect the number of hours people work, might affect the tendency to work with lower and higher income people. We haven't tried to quantify those things. But the impact is that these 800,000 (jobs) might not be exactly the number ..."
The CBO report also noted that the health care law could actually help economic productivity: "To the extent that changes in the health insurance system lead to improved health status among workers, the nation’s economic productivity could be enhanced. It is not clear, however, whether such changes would have a substantial impact on overall economic productivity or output. Moreover, many of the effects of the legislation may not be felt for several years because it will take time for workers and employers to recognize and to adapt to the new incentives."
PolitiFact rated Bachmann’s claim -- that the law "will kill 800,000 jobs" -- Mostly False because it exaggerated the CBO’s conclusions in a misleading fashion and included no qualifiers.
When we inquired, a CBO staff spokeswoman, Deborah Kilroe, had no comment on the earlier PolitiFact analysis. Kilroe did say the CBO had done no additional analyses of projected reductions in employment due to the 2010 law.
The CBO says there could be the equivalent of 800,000 fewer workers in connection with Obamacare, the changes in federal health-care laws ushered into place by Obama.
But these changes would not be due to employers not hiring workers. Rather, such results were predicted primarily because workers wouldn't have to work because health care coverage would be expanded. People working mostly for health insurance would either reduce their hours or leave the job market altogether. There could also be more economic productivity because of the health care law.
We rate Williams’ claim Mostly False.
PolitiFact, "The health care law a "job killer"? The evidence falls short," Jan. 20, 2011
The Congressional Budget Office, The Budget and Economic Outlook: An Update, Effects of Recent Health Care Legislation on Labor Markets, p. 48, August 2010
The Weekly Standard, "CBO Director Says Obamacare Would Reduce Employment by 800,000 Workers," Feb. 10, 2011
Factcheck.org, "A ‘Job-Killing’ Law?," Jan. 7, 2011
CQ Transcriptions, House Committee on the Budget hearing, Feb. 10, 2011, accessed via Nexis
E-mail interview with Hasner spokesman Rick Wilson, June 13, 2011
Telephone interview, Deborah Kilroe, associated director for communications, Congressional Budget Office, April 13, 2012
POLITICO, "CBO: Health law to shrink workforce by 800,000," Feb. 10, 2011
YouTube clip of Elmendorf testimony, Feb. 10, 2011
Read About Our Process
Browse the Truth-O-Meter
More by W. Gardner Selby
Roger Williams says CBO forecasts Obamacare will cost U.S. 800,000 jobs
Support independent fact-checking.
Become a member!
In a world of wild talk and fake news, help us stand up for the facts.