Studies Show that Obamacare Repeal Would Kill Millions of Jobs across the Country
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Studies Show that Obamacare Repeal Would Kill Millions of Jobs across the Country

Job cuts would result from loss of spending for premium tax credits and for Medicaid services

February 7, 2017

The repeal of the Affordable Care Act, also known as Obamacare, may have the unexpected result of creating millions of job losses in every state in the U.S.

An increasing number of studies suggest that repealing the controversial law even in part would have a negative effect on the entire economy, not just on the healthcare sector, reports The News & Observer (N&O).

Economic Policy Institute Director of Research Josh Bivens estimates that the proposed repeal would lead to almost 1.2 million jobs being cut in 2019.

Two factors would lead to the majority of these job cuts: the loss of federal spending on the premium tax credits that make marketplace coverage affordable for many people, and the loss of spending on Medicaid services, especially in the 31 states and the District of Columbia that expanded eligibility for it.

In general, those expansion states would experience the highest number of job losses resulting from cuts in Medicaid spending. In states that did not expand Medicaid eligibility, most of the job cuts will be due to the loss of federal premium tax credits.

For working-age adults under 65, some of the states that will be hit the hardest by job cuts include North Carolina, Kentucky, Louisiana, Maryland, Washington State, and West Virginia.

"These are not job losses that would send us back into a recession," Bivens said; however, they might cut the job creation rate by half.

"I think that would have a material effect," Bivens said. "I think people would notice that. The economy would feel less tight. The labor market would feel less tight. It just wouldn't feel like a place where people were super confident they'd be hired quickly if they lost their jobs. So, not a recession, but a noticeable slowdown."

The Commonwealth Fund and George Washington University's Milken Institute School of Public Health conducted a similar study. They estimate that, if funding for premium tax credits and Medicaid expansion were stopped, 2.6 million people would lose their jobs in 2019. This number, they warn, could rise to almost three million by 2021.

Bivens claims that his estimates are lower than those estimated in the Commonwealth study because his projections include possible job gains due to the elimination of Obamacare's higher Medicare taxes and its surcharge on earnings about the $200,000 mark.

The Commonwealth study estimated that 76,000 people would lose their jobs in North Carolina; 334,000 in California; 181,000 in Florida; 175,000 in Texas; and 137,000 in Pennsylvania.

Roughly 912,000 of the job cuts would take place in the health sector, according to the study, as nurses, health technicians, and others would likely be laid off.

However, according to Leighton Ku, director of George Washington University's Center for Health Policy Research, about two-thirds of the job cuts would happen in other industries, including construction, real estate, and finance. This is because healthcare money, which accounts for almost one-fifth of the nation's economy, helps to drive all sectors of the economy.

Most of the ACA's federal funding goes to health insurance companies as premium tax credits. These then go to hospitals, pharmacies, and other healthcare providers to pay for services.

Federal money for Medicaid are given to healthcare providers, which use the funds to pay their employees and buy goods and services. The money then continues to circulate, paying for food, mortgages, transportation, and other services. It generates tax revenue as it goes through the economy into other sectors.

"Federal funding thus initiates an economic cycle that ripples throughout the economy, both within and across state borders," the Commonwealth study stated. "When federal funds are cut, the results play out in the other direction, triggering losses in employment, economic activity, and state and local (tax) revenues."

"That's why there are these repercussions that occur outside the health sector," Ku said. "There are downstream effects that go well beyond that."

A recent report issued by the Center for Labor Research and Education at the University of California, Berkeley, estimated that 209,000 jobs would be cut in California if Obamacare were repealed and not replaced, while the nonprofit government research organization Pennsylvania Budget and Policy Center put the number at 137,000 due to the law's repeal.

Ku stated that he expects the final repeal will end up being more moderate "because the outcomes are so horrible."

"I don't think anyone wants to see 20 million or 30 million people lose their health insurance in a year," he said. "Nor do they want to see these huge job losses. So they would (likely) moderate (their proposals) either by making these things less horrible by way of repeal or, by having other replacement policies."