What the CBO Really Said about ObamaCare and the Economy

File this under: “Liberal media? What liberal media?”

I doubt the Congressional Budget Office expected The Budget and Economic Outlook 2014 to 2024 to be front-page news. They put out these ten-year look-aheads every six months or so, and they don’t usually get much reaction.

But say some news outlets decided to pay attention. You might expect — the CBO probably expected — reporters to focus on the summary. After all, that’s why people write summaries to 182-page government reports with eight appendices. In particular, you might expect articles to focus on the summary’s first line:

The federal budget deficit has fallen sharply during the past few years, and it is on a path to decline further this year and next year.

That sounds like a big deal. Very Serious People have been telling us for years (or more accurately, since Inauguration Day 2009, when they suddenly stopped believing Dick Cheney’s “deficits don’t matter” maxim) that the deficit is going to destroy our entire society. We’re going to turn into Greece, locusts will devour our fields, toads will rain from the sky, and so forth. So the fact that this situation is rapidly improving ought to get the VSPs attention.

The numbers are striking: The combined Bush/Obama budget of FY 2009 (October, 2008 to October 2009) had a $1.4 trillion deficit. (Bush’s first proposal for a FY2009 budget had an $407 billion deficit, which had grown to a projected $1.2 trillion by the time Obama took office, due to the economic collapse at the end of Bush’s term. Obama’s stimulus pushed the deficit the final $200 billion on its way to creating 3.3 million jobs, according to a previous CBO study.) FY 2013 ended in October with a $680 billion deficit, and the CBO projects deficits of $514 billion in FY2014 and $478 billion in FY2015.

At that level, this year’s deficit would equal 3.0 percent of the nation’s economic output, or gross domestic product (GDP)—close to the average percentage of GDP seen during the past 40 years.

So unless you think we’ve been in a Deficit Emergency for the past 40 years, we’re not going to be in one this year or next.

But that’s not what caught everybody’s attention. Instead of looking to the CBO’s summary for the story, the media (led by the right-wing media) looked to Appendix C “Labor Market Effects of the Affordable Care Act: Updated Estimates”. Because, you know, appendices of government reports are always so fascinating, especially the third appendix.

But even if you only read the appendices, you still have some choice about what the story is. Appendix B, for example, says:

CBO and JCT [Joint Committee on Taxation] estimate that the insurance coverage provisions of the ACA will markedly increase the number of nonelderly people who have health insurance—by about 13 million in 2014, 20 million in 2015, and 25 million in each of the subsequent years through 2024 (see Table B-2).

So despite all the scary (and debunked) headlines about cancelled policies and increased premiums, the ACA will make substantial progress on its main goal: Millions more people will have health insurance.

But the cost of that coverage will explode the deficit, right? Well, this report reiterated a previous conclusion:

Considering all of the coverage provisions and the other provisions together, CBO and JCT estimated in July 2012 (the most recent comprehensive estimates) that the total effect of the ACA would be to reduce federal deficits.

But maybe you’re worried about the “insurance company bailout” Republicans have been denouncing, which the rest of the world calls “risk corridors”. If so, you’d focus on this part of Appendix B:

CBO now projects that, over the 2015–2024 period, risk corridor payments from the federal government to health insurers will total $8 billion and the corresponding collections from insurers will amount to $16 billion, yielding net savings for the federal government of $8 billion.

So the “bailout” is a re-insurance plan that the government expects to make an $8 billion profit on.

But anyway, what does Appendix C say?

CBO estimates that the ACA will reduce the total number of hours worked, on net, by about 1.5 percent to 2.0 percent during the period from 2017 to 2024, almost entirely because workers will choose to supply less labor … The reduction in CBO’s projections of hours worked represents a decline in the number of full-time-equivalent workers of about 2.0 million in 2017, rising to about 2.5 million in 2024.

It’s not hard for me to imagine why this might happen: My wife is a (currently healthy) over-55 two-time cancer survivor, and prior to ObamaCare she couldn’t possibly have gotten insurance on the individual market at any reasonable rate. She happens to like her job, but many people in similar situations might decide to retire early (now that they have that option) rather than hang on until Medicare covers them. Similarly, my college roommate has been frozen into his job for the last couple decades, because his son was born with major medical problems that a new employer’s insurance company might write off as a pre-existing condition. Other people might prefer to work part-time, but have been hanging on to full-time jobs for fear of losing their health coverage. Or maybe extended Medicaid or S-CHIP coverage or an ObamaCare subsidy could shift the balance in a struggling household towards having one parent stay home with the kids.

That’s the kind of thing the CBO is talking about: “workers … choose to supply less labor”. It’s a good kind of thing.

So naturally it got covered like this by the conservative media:

Fox News: ObamaCare could lead to loss of nearly 2.5 million US jobs, report says

Washington Times: ObamaCare will push 2 million workers out of labor market: CBO

National Review: The CBO just nuked ObamaCare

And not much differently by the mainstream media:

The Hill: O-Care will cost 2.5 million workers by 2024

UPI: ObamaCare to cost 2.3 million jobs over ten years

And even a 180-degree false CNBC headline: CBO says ObamaCare will add to deficit, create reluctant work force — later corrected to allow that ObamaCare “may not add to federal deficit” rather than the accurate “the total effect of the ACA would be to reduce federal deficits”.

CBO director Paul Elmendorf testified before Congress Wednesday morning, and set the record straight. The CBO believes that ObamaCare will increase demand for labor over the next few years, creating jobs rather than killing them.

When reporters began to understand that they’d been scammed into repeating Republican talking points, many of them blamed the Obama administration. National Journal‘s headline: “The White House is Still Terrible at Explaining ObamaCare“. You see, it’s not up to reporters to check facts and inform their readers rather than mislead them. How can they be expected to print the truth when no one spoon-feeds the story to them properly? And why didn’t the White House (which doesn’t control the CBO) anticipate the report, anticipate that Appendix C would be the story, and anticipate that Republicans would twist its statements into pretzels? Shouldn’t they have been prepared for this?

That’s your liberal media in action.

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Comments

  • Nancy Browning  On February 10, 2014 at 9:57 am

    I love your analysis and agree with all of it except that if your wife of over 55 and less than 65 (Medicare-eligible-age) would retire that she’d get a great rate and not need to work. I am just over 55 and retired, and I did have one of the plans that covered me completely after a $5000 deductible for about $200/mo, and now, my prospects are over $500/mo for a similarly high-deductible policy that won’t qualify for my HSA (Health Savings Account). I know I am an exception in many ways, to have to work now that I have retired in order to pay for my health insurance, but please don’t have two lines in your blog stating that the ACA will help everyone; I am glad it helps the poor, but I am just a middle of the middle class American and it has definitely hurt me.

    • weeklysift  On February 10, 2014 at 10:41 am

      Whatever you’re paying, it can’t compare to what an insurance company would want to insure a two-time cancer survivor (including coverage for a possible recurrence). I’m not sure we could have found insurance at all, pre-ACA, if my wife hadn’t been insured through her employer.

  • Joe Irvin Conover  On February 10, 2014 at 10:13 am

    Can’t find those two lines where Doug says the ACA will help everyone. Where are they?

  • Nancy Browning  On February 16, 2014 at 10:03 am

    In response to your (and another’s) comment about my post, here are the two lines that I found inaccurate in your blog: (1) “So despite all the scary (and debunked) headlines about cancelled policies and increased premiums…” [There were cancelled policies like mine that were perfectly good otherwise, and my premiums will go up by at least 250%), and (2) “She happens to like her job, but many people in similar situations might decide to retire early (now that they have that option)…” [I am very happy that she {your wife} and others with cancer and other serious health conditions can now afford healthcare; that was not what I was referring to in my prior comment. I take issue with “might decide to retire early,” which they might be able to do if they make little per year, but not if they are making enough that they won’t be subsidized because most people can’t afford $500-700/month for insurance.]

    • weeklysift  On February 17, 2014 at 7:02 am

      On the first point, I will not argue with you about your own situation, which you obviously know better than I do. However, the cases that have made headlines have almost all been debunked, including the one in the Republican response to the SOTU. In the segment you quoted, the word “debunked” is linked to an article that did the debunking: http://www.theguardian.com/commentisfree/2013/dec/04/obamacare-horror-stories-debunked

      I still think you’re missing my point about early retirement, which has nothing to do with subsidies. It is not unusual for people to retire before 65 if they are in good financial condition. But if you have a pre-existing condition, you may only be able to get health coverage through your job. People in that situation can’t retire, even if they have sufficient savings. It has nothing to do with subsidies.

      Ditto for working part-time rather than full-time. In many jobs, only full-time workers are eligible for health insurance. If you have a pre-existing condition, that may be the only way you can get health insurance, so you’ll stay full-time even if you could get by financially on 20-30 hours a week. Again, it doesn’t necessarily have anything to do with subsidies.

  • Nancy Browning  On February 17, 2014 at 9:50 am

    Thanks for replying. I totally agree about pre-existing conditions, which I have (though not of the life-threatening variety). I was just saying it’s pretty hard or “impossible” to retire unless you have a great deal of money and have to pay $500-$700 per month. Yes, it is more possible than if you couldn’t retire at all. But because of this problem for early retirees, I know people who will opt for no insurance next year. Anyway…I think we basically understand one another. Thanks again.

Trackbacks

  • By Good Intentions | The Weekly Sift on February 10, 2014 at 1:09 pm

    […] This week’s featured posts are: “9 Things I Think About Education and the Common Core” and “What the CBO Really Said about ObamaCare and the Economy“. […]

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