In addition to potentially increasing the number of uninsured by 23 million and being unequivocally unpopular, House Republicans’ Obamacare replacement plan could leave nearly a million people unemployed.
That’s according to a new study published Wednesday by the Milken Institute School of Public Health at George Washington University and The Commonwealth Fund projects, which finds that the U.S. economy could see a loss of 924,000 jobs by 2026 if the American Health Care Act (AHCA) becomes law.
The study concentrated on coverage-related and tax repeal policies included in the AHCA. Some of the key provisions it said could add to job losses would:
- Phase out enhanced funding for Medicaid expansion by restricting eligibility in 2020, and imposing either a block grant or per capita caps.
- Replace premium tax credits with age-based tax credits. The premiums can be five times higher for older individuals, compared to the current threefold maximum.
- Allow states to waive key insurance rules, like community rating and essential health benefits. (The study does account for the Patient and State Stability Fund, a $8 billion grant meant to relieve states of high-cost patients.)
- Eliminate the individual mandate tax penalty and premiums hikes for people who do not maintain continuous coverage.
- Repeal numerous taxes and tax increases, like a tax on high-cost insurance (i.e. the “Cadillac tax”).
Short-term gain, long-term pain
Federal health funding stimulates the economy and job creation. Health funds pay hospitals, doctor’s offices, and other providers, and these facilities pay for their own respective employees and other goods and services, like rent and equipment. Health care employees and private businesses then use their earnings to purchase consumer goods like housing and transportation, circulating this money through the larger economy.
The GWU study found government spending or subsidies stimulate the economy more than tax cuts. Tax cuts do help, but only in the short term. The way AHCA is set up is that the tax cuts take effect sooner than federal funding cuts, which is why some states see net job growth by 2018. Then, when federal dollars are eventually pulled, states begin to see job losses by 2026.
Who’s most affected:
The employment rate among states that expanded Medicaid eligibility could disproportionately be affected, because those states received more federal dollars. New York, a state that expanded Medicaid, could be among the hardest hit with 86,000 job losses by 2026.
Between April 2016 and April 2017, New York added 76,800 jobs and the educational & health services sector saw the largest job gains, at 46,600 jobs. “The Affordable Care Act [ACA] contributed to that [growth],” Ronnie Kauder, senior research director at the New York City Labor Market Information Service, told ThinkProgress.
Kauder emphasized that the ACA wasn’t solely responsible for New York’s job growth, even in the health care sector. Uncontrollable factors like the state’s growing aging population and increasing life expectancy contribute to job growth as well.
New York has reaped the employment benefits of comprehensive health care, said Kauder. That’s in part because ACA encouraged states to test new models of health care delivery and shifted from a reimbursement system based on volume of services to value of services.
For example, New York received ACA grant funding to test effective ways to incentivize Medicaid beneficiaries, who struggle with chronic diseases, to participate in prevention programs and change their health risks. With that grant, New York created new programs at existing managed care organizations, which required new hires. The grant created positions like care coordinators, who connect and follow-up up with patients and providers in the program, said Kauder. “They are heavy on the training, but not licensed professionals,” she said.
But while she attributed some of New York’s job gains to the ACA, Kauder was skeptical that the GOP replacement plan would kill as many of them as the GWU study projects. “We don’t know what the state response will be,” he said. “It could be worse in Kentucky.”
The largest health care provider in New York, Northwell Health, hires on average 150 people a week. Northwell chief public relations officer Terry Lynam told ThinkProgress he doesn’t think the ACA directly contributed to a spike in job growth; however, it did help expedite the provider’s move from hospitals to outpatient care centers, also called ambulatory care, in an effort to slow rising health costs.
“What [ACA] has done was contribute to the ambulatory net growth [by cutting costs],” said Lynam. Northwell Health has 550 outpatient locations.
Northwell Health has qualms with the House GOP bill; specifically its cuts to Medicaid and change in coverage rules. “We are in a stronger financial position to survive that kind of reduction in revenue,” said Lynam. “But what about small providers serving low income areas, who need those Medicaid [dollars]?”
This blog was originally published at ThinkProgress on June 15, 2017. Reprinted with permission.
About the Author: Amanda Michelle Gomez is a health care reporter at ThinkProgress.