The US Congressional Budget Office says Obamacare will cut the workforce by the equivalent of more than two million workers.
CBO budget analysts said on Tuesday the reductions will begin in 2017 after the Patient Protection and Affordable Care Act takes full effect.
Lower-income employees will be hardest hit, limiting their hours to avoid losing federal subsidies.
The CBO said work hours would be reduced by the equivalent of 2.3 million full-time workers in the United States by 2021. The BBC reports it had previously estimated the new law would result in 800,000 fewer workers.
Some businesses may also decide to reduce their workforce to fewer than 50 full-time employees to avoid having to provide health insurance as mandated under the law.
The report also found workers nearing retirement may opt to work shorter hours to retain healthcare subsidies until they qualify for Medicare, a federal health programme for the elderly.
"The middle class is getting squeezed in this economy, and this CBO report confirms that Obamacare is making it worse," House of Representatives Speaker John Boehner (Republican) said in a statement.
