Repeal of the Affordable Care Act is already the topic of controversy for many reasons: how many people could end up uninsured, depending on how the ACA is repealed; how much people will end up paying for coverage; what might replace it in providing coverage; and how effective the replacement might be.
But there’s another aspect of the dispute that hasn’t gotten a lot of attention yet: how many jobs the repeal will cost.
And according to a report from the Economic Policy Institute, in 2019 the tally will be 1.2 million in every state in the country. The report looks at the effects of cuts to both spending and taxes that would occur under a full repeal, which would include cuts in federal spending nationwide by roughly $109 billion in 2019 and in taxes by roughly $70 billion in 2019.
States with the highest proportion of low- and middle-income families would see the most economic damage from the $109 billion in spending cuts, along with states that took up the ACA Medicaid expansion.
The $70 billion in tax cuts, on the other hand, would disproportionately benefit states with the most households in the top 1 percent.
The Tax Policy Center has estimated the distributional impact of tax cuts related to ACA repeal at the national level, and indicated that “an extraordinary 57.4 percent of these tax cuts would accrue to the top 1 percent, with over a third accruing to the top 0.1 percent alone,” the report said.
The combination of tax and spending cuts would reduce national job growth by almost 1.2 million in 2019, all else equal, according to the report, since low- and moderate-income households tend to spend a much higher share of marginal increases in disposable income while wealthier households save a significant proportion of income increases.
As a result, the spending cuts would hurt job growth more than the tax cuts would help it, with the overall effect of an ACA repeal being less spending and slower demand growth across all states, according to Josh Bivens, author of the report and research director at EPI.
In a statement, Bivens said, “If the ACA is repealed, working peoples’ purchasing power will be significantly reduced, which means they will spend less on goods and services in the local economy.” He added, “Job growth will be constrained due to this decrease in spending. Any spending boost from lower taxes as a result of ACA repeal would be swamped by spending cutbacks low- and middle-income families would have to undertake after losing access to Medicaid or subsidies in insurance exchanges.”
“The most important reason to oppose repealing the ACA is the 20 million Americans who would lose health insurance,” Bivens added. “But layered on top of this loss is a potential macroeconomic shock that would likely significantly affect job growth.”
Lost jobs would not be solely in health care, either; studies of jobs gained through Medicaid expansions in the American Recovery and Reinvestment Act (ARRA) indicate that more than 75 percent of the jobs gained were not in the health care sector.
And every state would lose jobs, with the extent depending on how much a state expanded spending (and thus will lose) and what portion of a state’s households fall within the groups getting the largest tax cuts (and thus will gain).
Eighteen states would see employment losses greater than 0.5 percent of their current state under-65 population, and the study said, “The top 15 job-losing states, as measured by jobs lost as a share of both the total employment and the share of residents under age 65, are Arizona, Colorado, Kentucky, Louisiana, Maryland, Montana, Nevada, New Jersey, New Mexico, North Carolina, Oregon, Rhode Island, Vermont, Washington and West Virginia.”
States that didn’t expand Medicaid would stand to lose the least, as would states with the largest share of households in the top 1 percent. They would benefit disproportionately from the insurance premium and cost-sharing subsidies of the ACA, the study said, pointing out that overall, insurance premium and cost-sharing subsidies amount to approximately 0.4 percent of non-expansion states’ gross domestic product, although in expansion states those subsidies equal roughly 0.15 percent of GDP.
In addition, while there are claims that any ACA job losses would be neutralized by countervailing Federal Reserve policy, the study said, “[m]onetary policy is unlikely to be able to provide an expansionary boost to economic activity anywhere near large enough to counteract the significant fiscal contraction posed by ACA repeal, even in 2019.”
In addition, a Huffington Post report cited Politico health care writer Dan Diamond as pointing out numerous times that “private sector employment has risen every single month since March 2010, when President Barack Obama signed the Affordable Care Act into law. Meanwhile, the Affordable Care Act has made it easier for aspiring entrepreneurs to leave large companies and start their own businesses, since the self-employed no longer have to worry about insurers denying coverage for preexisting conditions.”
If the provision of the ACA that forbids denial of coverage due to preexisting conditions is eliminated, that too will then weigh on employment.