NEW YORK (TheStreet) -- In a new report, the Congressional Budget Office once again lowballed the impact of the Affordable Care Act on labor force participation and the economy, in my view. I think that GDP, growth and employment for most workers will be harmed.
The CBO estimates that employment will be cut by 1.5% to 2%, thanks to workers choosing to cut hours or not work at all to obtain Obamacare subsidies for private insurance or maintain eligibility for Medicaid.
According to the report, lower employment only translates into a 1% reduction in workers' compensation, owing to the concentration of those in low-wage categories. However, I think the report fails to adequately calibrate the impact of higher Medicare taxes and the surcharge on interest, dividends and capital gains on the participation of older workers -- especially high-productivity and entrepreneurial workers and business owners over 50 -- who were not inclined to cut hours or retire altogether before now.
In addition, I think the CBO fails to consider the consequences of distorted career paths on labor productivity, negative effects on R&D spending and lower investment overall in the U.S. Those activities will be lost to China, Japan and Germany and other competitors in Asia and Europe owing to their lower health care costs.
Major industrialized competitors in Europe and Asia spend 9% to 12% of GDP on their universal health care, and often attain higher health care outcomes, while the United States spends 18%. And Medicare and Medicaid's own actuaries expect the latter figure to rise under Obamacare, thanks to the inadequacies of cost controls.