By providing heavily subsidized health insurance to people with very low income, and then withdrawing those subsidies as income rises, the [Affordable Care] Act creates a disincentive for people to work.
These words come straight from the mouth of the director of the Congressional Budget Office, Douglas Elmendorf. And they are behind his claim before Congress that ObamaCare will “reduce unemployment over the next few years.”
Elmendorf’s statement about ObamaCare’s reducing unemployment is being taken as a rebuke to Republicans who had referenced the CBO to say ObamaCare would kill 2.5 million American jobs. That was an oversimplification of the CBO’s actual finding, which is that ObamaCare’s disincentives to work would lead Americans by 2024 to voluntarily reduce their work hours by the equivalent of 2.5 million jobs.
But the claim that ObamaCare will “reduce unemployment” strikes us as perhaps an even more damning indictment. Because it rests on an accounting gimmick. As Wisconsin GOP Rep. Paul Ryan helped make clear in his own questioning of Elmendorf, if unemployment goes down because of ObamaCare, it’s only because in calculating our unemployment rate, we don’t count those who have dropped out of the workforce altogether.
That also helps explain the troubling dynamic of the Obama years, when the unemployment rate drops not because the economy is cranking out more jobs, but because more and more jobless Americans have given up looking for work. As Ryan also pointed out, this dynamic is a prescription for lower economic growth.
Only in Obamaland could anyone view this as vindication.