Could we experience an economic funk over an Obamacare repeal?

January 13, 2017

A repeal of key provisions of the health law could lead to significant economic disruption and substantial job losses in every state, according to a new study.

The repeal of the Affordable Care Act could create serious problems for insurers, healthcare providers, workers and patients, according to a new study.

A repeal of key provisions Obamacare could lead to significant economic disruption and substantial job losses in every state, according to new research from the Milken Institute School of Public Health at the George Washington University and The Commonwealth Fund.

Ku

“If key parts of Obamacare-premium tax credits and Medicaid expansions-are repealed in 2019 and there is no replacement plan in place, we project that 2.6 million jobs could be lost nationwide in 2019,” says lead author Leighton Ku, PhD, MPH, director of the Center for Health Policy Research and professor of health policy and management at the Milken Institute. “There could be major losses in revenue as well as changes in policies. The health insurance marketplaces could collapse and Medicaid programs would shrink and it is not clear what would take their places.” 

Almost 1 million of those jobs would be in healthcare, but the remainder are in other sectors of the economy. In addition, states might find that their economics shrink by $1.5 trillion from 2019 to 2023, according to the study.

“Finally, state and local tax revenues could drop by $48 million over five years, creating problems for them if revenues shrink just as needs rise, due to increases in the number of uninsured and unemployed,” Ku says.

The study, the first nationwide study of its type, examined the impact of a potential January 2019 repeal of two parts of the ACA: the federal premium tax credits that help low- and moderate-income people purchase insurance on the health insurance marketplaces (also known as exchanges) and federal support for Medicaid expansion.

On the campaign trail, President-elect Trump vowed to repeal and replace Obamacare.

Next: Key findings

 

 

Other findings include:

· Job losses would affect every state, but 10 would suffer the biggest hits, including California, Florida, Texas, Pennsylvania, New York, Ohio, Illinois, Michigan, New Jersey, and North Carolina.

· One-third of the total 2.6 million job losses would be concentrated in healthcare; the remaining two-thirds of losses would be in other industries, including construction, real estate, retail trade, finance and insurance.

· Gross state product, the state equivalent of national gross domestic product, could fall by $256 billion in 2019 alone. From 2019 to 2023 that same economic indicator could drop by $1.5 trillion.

· The resulting economic disruption could trigger reductions in state and local tax revenues, amounting to $48 billion lost over five years.

· State and local governments would get hit with shrinking tax revenues at the same time they are facing increased demand for healthcare services from the millions of people losing their health insurance.

All states could suffer economic distress if the Medicaid expansions are cancelled-even the 19 states that have not expanded the program. That’s because the economic benefits of Medicaid expansion flow across state lines: businesses and individuals who benefit from the economic growth buy goods and services not only in their own states but also in other expansion and nonexpansion states

“In the near term, executives could communicate with federal and state legislators to express their concerns if Obamacare is repealed without clear replacement plans,” Ku says. “Insurance executives may want to join or create coalitions with other interested parties-healthcare providers, chambers of commerce, unions, and others-to address these concerns. In the longer run, insurance executives would need to make plans for major  changes, including possible shake-ups, when and if replacement policies become effective.”