NCPA - National Center for Policy Analysis

Even CBO Is Skeptical of ObamaCare

November 1, 2010

Congressional Budget Office (CBO) Director Douglas Elmendorf recently spoke at the University of Southern California about the economic impact of ObamaCare.  He predicts that ObamaCare will further depress the nation's employment picture, says the Heritage Foundation.

CBO's analysis of ObamaCare predicts that it will reduce the amount of labor being used in the economy by roughly half a percent.  

  • Elmendorf states that this impact will be small, but in reality the impact is small only in relative terms.
  • For instance, a half-percent loss in jobs in the American economy today would translate into about 750,000 additional Americans losing work.

The reason for the job loss is twofold, says Heritage.

  • First, ObamaCare raises costs on businesses with additional mandates and taxes, which will negatively impact hiring.
  • Second, ObamaCare increases the social safety net with a massive Medicaid expansion and generous subsidies to purchase insurance -- this increases implicit marginal tax rates and discourages work.

Elmendorf's recent remarks focus on the impact ObamaCare will have on lowering the amount of unnecessary spending on health care.  The answer appears to be it won't have much of an effect, as CBO projects that health care spending will be at least 25 percent of gross domestic product (GDP) by 2035, up from 17 percent today.

In his recent remarks, Elmendorf goes beyond the 10-year purview of the CBO's budget "score" time frame to look at the long-range impact of ObamaCare on health care spending.  He expresses doubt that the new health care law can drive efficiency improvements and reduce wasteful spending.

Source: "Even CBO Is Skeptical of ObamaCare," Heritage Foundation, October 26th, 2010.

For Heritage text:

For Elmendorf remarks:


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