Friday, February 14, 2014

Obamacare's Ups and Downs

According to a recent Congressional Budget Office (CBO) report, the number of people having health insurance will jump up four percentage points this year, from 82% to 86%. The Kaiser Family Foundation puts the figure at 85% in 2012. Employers offering health insurance has dropped from 66% in 1999 to 57%, with the slide beginning in 2004, while President George W. Bush was in office. At the same time, high deductible plans have been offered 38% of the time in 2013, versus 10% of the time in 2006--yet the average cost of family coverage has nearly doubled in the same period. The employee's portion has nearly doubled as well, with less coverage. This trend has grown faster with companies with 200+ employees. The rate had doubled from 2006-2009.

Controversy continues to hound Obamacare with the projection that a majority of 2.3 million people will quit, voluntarily reduce their hours or stop looking for work  by 2021 because of the ability to get health insurance apart from employers. Additionally, the more they earn with their employer, the lower the subsidy is. The CBO is not saying that less jobs will be created. It's saying that people will leave their jobs. The report also shows the rate of participation in the labor force was 67.3% in first quarter of 2000. Through 9/11, it had dropped steadily to a rate of 66.7%. It then continued to slide to 65.9% up to Obama's first inauguration. Prior to the passing of the Affordable Care Act, the rate dropped again to 64.9%. Since then, it's dropped to 63.3% prior to full implementation of the ACA. As the baby boomers retire, the projected rate is nearly linear till it decreases to 60.8% by the end of 2024 (a bit more than 10 years from now). Here's the chart:
At the same time, CBO estimates that labor wages will increase in the next ten years. How this relates to job loss, reduction to part-time or of part-time hours is interesting to ponder. Is it good news for workers?

What should be more worrisome to Congress is the projection that national debt interest payments are going to exceed "other" mandatory spending, defense discretionary spending and non-defense discretionary spending as separate categories. Interest payments will be 44% of those three combined. Don't hear much chatter about that yet.

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