Despite glowing reviews from the House GOP about their health care bill, the people that actually crunch the numbers say it’ll likely mean millions more uninsured and higher premiums for people in poorer health. Now comes more bad news: it’ll also result in more than 900,000 lost jobs and billions in lost state revenue.
A new report from researchers at the Commonwealth Fund and George Washington University Milken Institute School of Public Health calculated the impact of the American Health Care Act (AHCA), which House Republicans passed in May, on employment and economic activity in every state. They found that if the AHCA becomes law, it could mean a loss of 924,000 jobs by 2026, with a majority of those losses felt in the health care sector. Also by 2026, gross state products would face a loss of $93 billion and business output would have declined by $148 billion. States that expanded Medicaid eligibility — which initially came with 100 percent funding from the feds — would be especially hard hit if the AHCA successfully repealed and replaced the Affordable Care Act (ACA).
“If this passed, there will be more people uninsured, more people unemployed, state budgets will suffer and there will be less public revenue for states to invest,” Leighton Ku, lead author of the new report and director of George Washington University’s Center for Health Policy Research, told me. “The end game is essentially less revenue for states, but an increased demand for their services.”
Those job losses, however, won’t hit immediately. Before the deep cuts to health care funding are felt on the ground, Ku and colleagues estimate the AHCA would lead to 864,000 more jobs by 2018. That short-term benefit, the report says, is because the House GOP bill initially raises the federal deficit by repealing a number of ACA taxes — like taxes on investment income, high-income earnings and medical device makers — that went toward supporting the ACA’s expansion efforts. Ku said from a monetary perspective, the AHCA’s tax repeals are a “big deal — it’s billions of dollars” in lost tax revenue. In the short term, he said, the feds go into deficit to pay for the tax repeals, leaving more money in people’s pockets to fuel the kind of consumer consumption that can stimulate economic growth.
But it won’t last, according to the report. As the AHCA’s deep cuts to Medicaid and marketplace subsidies come to full fruition, states start losing revenue and jobs. That initial jobs bump comes because the House GOP bill’s tax cuts go into effect before the cuts to Medicaid and insurance subsidies do. As Ku said, the bill “front loads the tax cuts and back loads the cuts to health care.” The irony, he said, is that cutting taxes on the wealthy, which the AHCA does, typically doesn’t stimulate the economy as well as providing relief for low- and moderate-income families. Ku and co-authors Erika Steinmetz, Erin Brantley, Nikhil Holla and Brian Bruen write:
Both government spending increases and tax reductions can stimulate job creation and economic growth. The relative effects depend on how the funds are used. Government spending or transfers, like health insurance subsidies, typically have stronger multiplier effects in stimulating consumption and economic growth than do tax cuts. Tax cuts usually aid people with high incomes who shift much of their gains into savings, stimulating less economic activity. A recent analysis found that 90 percent of the AHCA’s tax cuts go to the top one-fifth of the population by income.
At a more local level, consequences of the AHCA vary from state to state, but the outcomes overall aren’t promising, the report found. The 10 states with the largest job losses by 2026 will be New York with 86,000 lost jobs; Pennsylvania at 85,000; Florida at 83,000; Michigan at 51,000; Illinois at 46,000; New Jersey at 42,000; Ohio at 42,000; North Carolina at 41,000; California at 32,000 and Tennessee at 28,000. States that expanded their Medicaid programs will experience faster and deeper job and economic losses, though states that didn’t expand will face losses as well. Laws in seven states — Arkansas, Illinois, Indiana, Michigan, New Hampshire, New Mexico and Washington — automatically reverse the Medicaid expansion if the agreed-upon federal Medicaid funding changes, which it most certainly does under the House GOP bill.
The report also estimated that if only the AHCA’s coverage losses were implemented — and not its tax cuts — it could lead to job losses of 1.9 million by 2026, with such losses beginning to climb in 2019. If only the bill’s tax cuts were realized, jobs would be expected to grow through 2026. However, if both tax cuts and coverage cuts are put into place, the initial job bump would eventually morph into job loss. About two-fifths of the jobs lost due to the AHCA’s coverage changes would be felt in the health care sector. Researchers also noted that Trump’s fiscal year 2018 budget proposal, which came out in May, appears to call for an additional $610 billion cut to Medicaid. If that happened in addition to enactment of the AHCA, the employment and economic losses would be even greater.
Ku said if the health care sector does lose jobs at that rate, it will surely affect the sector’s capacity to serve all those in need. And while that impact would differ by community, it’s areas that don’t have enough health providers in the first place — like rural communities — that could suffer most.
This most recent jobs report follows a different report, by the same researchers and released in January, that studied the economic and job impact of simply repealing the ACA without replacing it. That report also found job and economic losses in every state. Ku said when the Senate releases its version of a repeal-and-replace bill, he and his colleagues plan to calculate its economic impact as well.
For a copy of the new report, the “American Health Care Act: Economic and Employment Consequences for States,” visit the Commonwealth Fund.
Kim Krisberg is a freelance public health writer living in Austin, Texas, and has been writing about public health for 15 years. Follow me on Twitter — @kkrisberg.