Ritter Insurance Marketing, Craig Ritter

CBO Reports that ACA Will Reduce Labor Force by 2.5 Million Workers by 2024

Here is a link to the CBO’s updated 2014 Budget and Economic Outlook projections.  The updated estimates for insurance coverage are found beginning on page 105 and the Labor Market Effects of the ACA are found beginning on page 117.

Some of the interesting highlights include:

  • On page 106, you will find the effects of on the deficit.  You can see that spending on Exchange Subsidies are projected to ramp up rather quickly.  Starting at $20 billion this year, in just 3 years, subsidies are expected to exceed $100 billion/year starting in 2017 and continue to rise to $159 billion by 2024.
  • On page 107, the CBO expects about 6 million people to receive coverage on the exchanges (down from their earlier estimate of 7 million), however, in 3 years, the number is expected to quadruple to 24 to 25 million by 2017.
  • Roughly 80% of those enrolled via exchanges are expected to receive subsidies.
  • On page 108, the ACA expects to reduce the number of uninsured Americans by a little less than half.  Roughly decreasing the uninsured by 25 million by 2017 from 56 million to 30 million.
  • The CBO expects the pool of Employment based coverage to fall by 2 million in 2015 and by another 4 million in 2016 (6 million total decrease by 2016.
  • Average subsidies are expected to be $4,700 per enrollee in 2014, rising to about $5,600 by 2017.
  • On page 117, the CBO expects about 2 million people by 2017 to exit the workforce due to the availability of subsidized insurance coverage and expects this to increase to 2.5 million by 2024.

Posted by filed under Health Care Reform .

  • Anonymous

    Thoughts from an agent who has written 80 ACA apps since October in somewhat affluent central Bucks County PA

    Underground economy is alive and well — anybody who is self-employed and has access to cash is hitting this ACA subsidy hard — hair salons, contractors, food service, etc Their moral argument is if they didn’t hide income, they would be thrown out of the middle class.

    No asset test — BMWs, Jaguars pull up to my office. People tell me about their golf condos and winters in SC. But if income is temporarily tight…big ACA subsidy. Nobody has discussed a change in life circumstances, the need to sell the second home, get a less expensive car, live within one’s means, use some savings before tapping the Treasury..etc. Maybe this is atypical because of where I live…vs. West Virginia where 70,0000 people enrolled in Medicaid…., but I see this daily.

    Doesn’t feel right….some I’m not sure where this is going.

  • Dave G.

    This report will really stir up the bee’s nest! Reading about all the billions and eventually trillions of federal subsidy for exchange plans should make you wonder: Where is all this money going to come from? Or better, from WHOM is all this money coming from?

    Don’t mean to spoil your day, but what you don’t know can hurt you. I’m learning that many insurance brokers and employers are unaware that a good chunk of this money will come from aggressive employer audits by the Dept. of Labor and the IRS. The fines and levies for non-compliance can be huge and go way beyond the pay or play issues of which we are all aware. This impacts even the smallest employers, most of whom are blissfully unaware the wolf is is about to blow the house down.

    This situation exists thanks to the Affordable Care Act, which linked it’s notification and disclosure requirements to existing ERISA law. Penalties for non-compliance are essentially taxes or excise taxes, so the IRS is teamed up with the DOL and it’s enforcement division, the Employee Benefit Security Administration. DOL and EBSA are putting boots on the ground already and a reliable source tells me the DOL goal is to audit EVERY employer sponsored plan within the next 5-years.

    Any employer (except church and govt.) who offers any kind of benefit like dental, vision, critical illness, life, disability, HRA is subject to ERISA. If you have employers providing Medicare coverage like Advantage plans or Medigap to employees, you may find yourself with a problem on your hands. Even just having the “company” pay someone’s premium can create an “employer-sponsored” plan and all the red tape that comes with it.

    The trap awaits those employers with no system to produce, distribute and record the ongoing notifications to their employees about their benefits and the many notices of ERISA and the ACA. The chief ERISA requirement is having a Summary Plan Description (SPD) on file for the group. Benefit booklets or even the new Summary of Benefits and Coverage (SBCs) do NOT meet this definition nor satisfy the requirement. Then there is the ACA and it’s notices, a total of 13 required since March 2010, with the notification to employees of the existence of the Exchanges the most recent.

    The requirement for SPDs for each plan (or a Wrap Document that covers all plans) has been around for years. But nobody really paid attention as only larger employers ever got audited. The ACA changed all that by tying all those ACA notices (women’s health, the new “free” preventive services, children’s dental, notice of the Exchange, etc) to ERISA. Since the ACA and ERISA apply to ALL employer groups, no matter how large or small, you and your clients may soon find the DOL knocking at your door. .

    The danger to the broker is obvious: You will be the first person the employer calls when the DOL Audit letter hits the company mailbox. The accountant may think it was your job to advise the employer on this as a “benefits” issue. You may think it’s the CPA’s problem since the penalties are really “taxes” he gets to calculate for the employer. Or, you may think it is the property and casualty agent’s area, since his policy may take a hit if the employer is deemed liable for breach of duty. If this isn’t a circular firing squad, what is? Or in Watergate terms: What didn’t you know and when didn’t you know it?”

    If you are involved with employee benefits in any way, you’ll need to have a serious compliance discussion with each and every employer client and either provide a compliance package or refer them to someone who can, then document it all in writing. Then you can say “I told you so” and feel good about it. . .

    This is also another reason to just deal with seniors, personally, and offer them Medicare plans, etc. outside of any employer-sponsored arrangement.

    Now don’t you feel even better about the Affordable Care Act?


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