I have saved the 800-pound gorilla for last. The CBO now estimates that the ACA will reduce labor supply by about 1.5% to 2% over a decade. That’s small and, arguably, a good thing. Let’s count it as antigrowth, though certainly not as a “job killer.” But what about the potential savings in health-care costs from the ACA—which are clearly pro-growth?
Remember, one of the principal objectives of health-care reform is to slow down cost increases, thereby reducing the burdens on both businesses and the federal budget. And health-care costs have indeed slowed dramatically. The following little tidbit is buried deep in the CBO report, and has gotten little attention: CBO “lowered their estimate of average premiums for insurance coverage through exchanges in 2014 by about 15 percent.” Let me repeat that: 15% lower, just since last May. That’s huge.
No one attributes the entire slowdown in health-care costs to ObamaCare—which, after all, is barely under way. But many experts do attribute part of it to changes in Medicare that are in the ACA and to preparations for other aspects of the new law. If the recent past is prologue, the pro-growth effects via lower health-care costs will swamp any antigrowth effects via labor supply.