Affordable Care Act: Not a job killer after all

Last week’s Congressional Budget Office report said that the Affordable Care Act would reduce hours worked in the long run.

Republicans started jumping up and down in glee, saying that they knew it all along — Obamacare is a job killer.

Not so fast.

What the CBO said is that “The estimated reduction 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.”

What does that mean? Here’s how it could play out for a fictional family with a mom, dad and two kids. Both parents work. The mother’s job offers health insurance, but only if she works at least 35 hours a week. She earns $9 an hour, and almost all of her check goes to pay for child care while she’s working.

The family needs health insurance. Since the dad’s job doesn’t offer health insurance, the mom can’t afford to leave her job or to work fewer hours. That’s what Paul Krugman calls “job lock.”

She might want to stay home with the kids. Or she might want to work fewer hours, only while the kids are in school or preschool. Until now, she hasn’t been able to make those choices.

With the Affordable Care Act, the family can get insurance that is not tied to a specific job. They may qualify for a partial subsidy to help pay the premiums. And they will be able to make decisions about whether, where and how many hours to work. Their decisions on work will no longer be controlled by the work/health insurance tie.

Republican House leader Eric Cantor tweeted: “Under Obamacare, millions of hardworking Americans will lose their jobs and those who keep them will see their hours and wages reduced.”

But that’s NOT what the CBO report said. There’s a big difference between losing your job and quitting your job. There’s a big difference between having your hours reduced by your employer, and choosing on your own to reduce your hours. As Paul Krugman writes:

“It has always been clear that health reform will induce some Americans to work less. Some people will, for example, retire earlier because they no longer need to keep working to keep their health insurance. Others will reduce their hours to spend more time with their children because insurance is no longer contingent on holding a full-time job.”

In my book, that’s a very good thing.

UPDATE: Sunday morning – The Washington Post has an article today about people who quit their jobs, thanks to the Affordable Care Act. Polly Lower quit when her job description was changed.

“’It was wonderful. It was very freeing,’ said Lower, 56, of Bourbon, Ind., who is now babysitting her 5-year-old granddaughter full time.”