On Tuesday, the Congressional Budget Office projected that The Affordable Care Act will reduce the number of full-time workers by 2.3 million in 2021, leading critics to seize on the claim as evidence that the health care law is undermining job growth.
But that’s not what the CBO actually said. In fact, CBO economists write that “[t]he estimated reduction [in labor] stems almost entirely from a net decline in the amount of labor that workers choose to supply, rather than from a net drop in businesses’ demand for labor.” Americans won’t be losing their jobs, but people who are only working to maintain access to their employer sponsored health insurance plans will be able to leave the workforce or work fewer hours because they can obtain coverage elsewhere. That’s a goal that prominent Republicans, conservative think tanks and policy analysts have supported for years:
– “A lot of people change their jobs. So the tax benefit should change and go with them, and not be attached to their jobs. We want to address job lock. So, the key question that ought to be addressed in any health care reform legislation, is are we going to continue job lock, or are we going to allow individuals more choice, and portability to fit the 21st century workforce?” [Paul Ryan, 5/20/2009]
– “Today, leaving a job or changing jobs means leaving behind the health insurance provided at the place of work. Individuals who wish to take a better job, change careers, or leave the workforce to raise a family or to retire early take substantial risks. [...] Under the McCain plan, which links tax breaks directly to individuals instead of to their place of work, individuals would no longer feel obligated to stay with their employers simply because they need to keep their employer-based health insurance. [Heritage Foundation, 10/15/2008]
– “Of course there are a number of things that I like in health care reform that I’m going to put in place…. I also want individuals to be able to buy insurance, health insurance, on their own as opposed to only being able to get it on a tax advantage basis through their company.” [Mitt Romney, 9/9/2012]
– “[T]he employer-based system leads to ‘job lock,’ whereby people are afraid to leave their jobs if they fall ill on the job, because switching plans could mean higher premiums or denial of coverage.” [Avik Roy, former health care adviser to Mitt Romney, 2/7/2012]
In other words, ensuring that an older person who stay in a job for its health care coverage can retire sooner or that a mother can leave her job to take care of a sick child, or an entrepreneur can can quit secure employment and start a new business have long been bipartisan goals. Democrats have sought to give Americans more options though the health care law’s exchanges and Medicaid expansion while Republican health care proposals focus on ending the favorable tax treatment of employer-sponsored health care and providing individuals with tax credits to buy their own health insurance on the individual market, across state lines.
Academic research has quantified the cost of keeping health care coverage connected to the workplace. In 2008, researchers at Harvard estimated that there are “11 million people who would like to change jobs but are locked into their current job simply to keep their insurance,” while other studies have found that “job-to-job mobility is estimated to increase by as much as 25 percent when alternative group coverage is available.”
As Sen. John McCain (R-AZ) explained in 2008, while rolling out the health care proposal that animated his presidential campaign, “‘job lock’ reduces opportunities for American workers because they often pass up new jobs for fear of losing their health care coverage.” The health care law will start to change that predicament.