"The CBO, the Congressional Budget Office has said that Obamacare will kill 800,000 jobs."
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Michele Bachmann says Obamacare will kill 800,000 jobs
Michele Bachmann announced that she filed paperwork to run for the presidency at a debate in New Hampshire on Tuesday. She also used the stage to continue her long-standing attacks on President Barack Obama's health care law.
"As president of the United States, I will not rest until I repeal Obamacare. It's a promise. Take it to the bank, cash the check. I'll make sure that that happens," Bachmann said. "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?"
We got many requests from our readers to check that 800,000 number. It's something we've looked at before.
The CBO is a nonpartisan agency that provides economic analyses to members of Congress on how legislation will impact the federal budget and the economy as a whole. In August 2010, it published a new outlook that considered the jobs impact of the new health care law.
The CBO has determined that the law will reduce "the amount of labor used in the economy," but Bachmann's comments leave out many important qualifiers.
The CBO has determined that the law will reduce "the amount of labor used in the economy," but Bachmann's comments leave out many important qualifiers.
We'll begin with the negative effects the health care law could have on employment.
The health care law will cost some employers money, particularly large ones. Employers aren't required to offer insurance, but if they don't and their workers make low wages and qualify for new tax credits to buy insurance, then the employers will have to pay a fine. (This part of the legislation does not go into effect until 2014.) But even so, the CBO says that fines imposed on large employers will affect low-wage workers the most.
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Still, the CBO also says the effect will 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."
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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 for the health insurance. Here's how the CBO puts 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 is saying here that some people right now are working mostly to keep their health insurance. Once they 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.
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. But CBO director Douglas Elmendorf confirmed that number in testimony before Congress back in February.
But Elmendorf also explained that number was an extrapolation, and that the number might not be precise. "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," 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."
Bachmann said the health care law "will kill 800,000 jobs." We find that's an exaggeration of what CBO said. There could be the equivalent of 800,000 fewer workers thanks to the federal health care law, according to the CBO, but not because employers wouldn't hire them. It's primarily because workers wouldn't have to work because the new law expands health care coverage. That means people working most 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. Bachmann's statement leaves out so many qualifiers that it becomes misleading. We rate it Barely True.
Bachmann said the health care law "will kill 800,000 jobs." We find that's an exaggeration of what CBO said. There could be the equivalent of 800,000 fewer workers thanks to the federal health care law, according to the CBO, but not because employers wouldn't hire them. It's primarily because workers wouldn't have to work because the new law expands health care coverage. That means people working most 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. Bachmann's statement leaves out so many qualifiers that it becomes misleading. We rate it Barely True.
Editor's note: This statement was rated Barely True when it was published. On July 27, 2011, we changed the name for the rating to Mostly False.
Our Sources
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
POLITICO, "CBO: Health law to shrink workforce by 800,000," Feb. 10, 2011
YouTube clip of Elmendorf testimony, Feb. 10, 2011
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Michele Bachmann says Obamacare will kill 800,000 jobs
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