A study by Laurel Lucia and Ken Jacobs at the University of California, Berkeley, considered the hypothetical effects in California of a law similar to H.R. 3762, a Congress-passed measure for ACA repeal that President Obama vetoed in 2015. The “repeal and delay” plan currently being pursued by Congress—which would use the budget reconciliation process to defund critical pieces of the ACA, but keep them in place until a replacement health law is crafted—might be expected to look like H.R. 3762. That’s because that bill was the most comprehensive repeal effort yet, and was also realized through the budget reconciliation process. H.R. 3762 would have eliminated the Medicaid expansion to low-income adults and the exchange subsidies over a period of two years, and would have ended the employer and individual insurance mandates immediately.
Lucia’s and Jacobs’s work suggests that after the two-year sunset of the insurance and subsidy expansions, and with no replacement in place, such a bill would cost California over 200,000 jobs and over $20 billion in total gross domestic product. Most of these losses would occur within the health industry itself, but would also happen in other sectors, like the food and transportation sectors that provide vital services for hospitals.
Last week, a report from researchers at George Washington University and the Commonwealth Fund essentially repeated the Berkeley experiment for all 50 states. They came to the same conclusion: that repealing the ACA’s health-insurance subsidies and Medicaid expansion in an H.R. 3762-like plan would result nationwide in a loss of around 3 million jobs, $1.5 trillion in gross state products, and $2.6 trillion in total business activity between 2019 and 2023. Because hospitals often absorb the costs of patients who can’t pay, a plan stripping coverage from low-income people would also increase uncompensated-care costs by over $1 trillion for the decade after 2019.
These losses are significant, especially when one takes into account how much federal investment the ACA actually makes. Between 2019 and 2023, the federal funds these states could expect to receive total only about $800 billion, an indication that Obamacare’s investment carries a substantial economic return.
Lead researcher Leighton Ku noted that, as in the California study, many of the losses from repeal would come from outside the sector directly influenced by federal funding. “If you pay your workers, your workers are consumers, and they go out and buy things like food, transportation, housing, and other stuff,” Ku said, referring to employees in the health-care sector. In other words, federal funding for the Affordable Care Act works as a general economic stimulus.
A recent article in The New England Journal of Medicine illustrates the mechanisms by which that stimulus works, using Michigan as an example. Under the ACA, the federal government paid for 100 percent of the costs of each person eligible under Medicaid expansion through 2016. But that matching rate ratchets down to 90 percent of costs in 2020. Yet even with that decrease, the study found that the Medicaid expansion in Michigan, which took effect in 2014, would add 30,000 jobs by 2021 and create hundreds of millions of dollars in savings for the state. Most of those jobs would come from outside of the hospital and ambulatory health-care industries.