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Friday, January 6, 2017

Repealing the ACA Would Wipe Out a Year's Worth of Job Growth

What can kill nearly 3 million jobs? The answer is repealing the health law without a sound replacement plan in place.

Today, the Commonwealth Fund and George Washington University released a report detailing the economic and employment consequences if Republican congressional leadership gets what it is aiming for: repeal of the Affordable Care Act (ACA) without a replacement plan in sight.  

A lot has been written about how a repeal of the health law without a sound replacement plan would lead to 30 million people losing health insurance. The Commonwealth Fund and George Washington University report is the first detailing the broad employment and economic consequences that would follow repeal of the ACA. 

The report projected the impact of a 2017 repeal bill along the lines of prior Republican repeal bills, bills that cut the health law’s funding in 2019, with no replacement plan in place. The result would be 2.6 million jobs lost in 2019, rising to over 2.8 million jobs lost from the economy by 2023. There would be jobs lost and reduced economic activity in every state.  That’s because there’s a big connection between the health law and jobs.

How the Affordable Care Act creates jobs

Through federal tax credits and Medicaid funding going directly to states, the health law has meant millions of people have been able to get health coverage, either by purchasing private insurance plans or through state Medicaid programs. That insurance then pays for their health care—doctors’ visits, hospitalizations, emergency services, nurses’ care, etc. 

Before the health law, most of these people were uninsured. They were skipping needed health care, or getting care they couldn’t pay for. Now that their care is paid for, health care providers do better financially.  That’s not just doctors and hospitals executives. When the health care system does better, that has a broad impact on the local economy. 

For example, hospitals hire more staff at every level—doctors, janitors, nurses, orderlies, cafeteria workers; doctors need more staff, too. These new hires spend money in the community buying groceries, renovating their homes, making purchases at local stores—that’s all money going into the state and local economy.  Hospital have more money to undertake capital improvements, like new construction projects or renovations. That’s money for local construction workers.  

Getting rid of the federal tax credits and Medicaid funding not only effectively cancels health coverage for millions, but it takes money out of the health system and local economies. That leads to job losses. That also leads to an economic slow-down in states.

Repeal of the health law would lead to job losses in sectors beyond health care 

While a third of the jobs lost would be in health care, that’s not the only sector that would be affected. Jobs would be lost across state economies, including construction and retail trade.

Over 90 percent of the jobs lost would be in the private sector. 

Repeal could wipe out one year’s worth of job growth 

The job losses projected in the Commonwealth Fund/George Washington University report are substantial. The estimated 2.6 million jobs that would be lost in 2019 is about the same as the total number of jobs created in the economy in 2015 (2.7 million).  Repeal without a sound replacement plan could wipe out a year of jobs growth. 

That’s a hard hit for a country where many places, particularly rural areas and the industrial Midwest, have not fully recovered from the Great Recession. Michigan, Ohio, and Pennsylvania would each loose over 100,000 jobs. 

In September, President-elect Trump said that his economic plan would create 25 million jobs. Making repeal of the health law, with its associated job losses, a Republican priority isn’t a good start.