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Healthcare Job Growth Threatened by ACA Repeal

Analysis  |  By John Commins  
   January 11, 2017

The Milken Institute School of Public Health at the George Washington University and The Commonwealth Fund offer some troubling projections if Congress repeals just two key provisions of the Affordable Care Act.

Repealing the Patient Protection and Affordable Care Act without first providing at least some inkling of what will replace it could threaten one of the most dynamic job creation machines in the U.S. economy, a report suggests.

The U.S. economy created more than 2.1 million jobs in 2016, of which 421,700 were within the healthcare sector, according to preliminary figures from the Bureau of Labor Statistics.

That means that the healthcare sector accounted for 20% of all new jobs in 2016. That includes about 260,000 new jobs in ambulatory services, and 139,000 new jobs in hospitals; a little more than 35,000 new jobs per month, a pace down slightly from the 471,600 healthcare jobs created in 2015, BLS data show.

Since 2010, the year that the "job-killing" Affordable Care Act was signed into law, BLS data show that the economy created 15.2 million jobs, of which 2 million were in healthcare, representing nearly 13% of all jobs created in a six-year span of sluggish job growth in the slow emergence from the Great Recession.

Generally speaking, healthcare jobs are good jobs, particularly in economically depressed areas where decent jobs are scarce and it's not uncommon for the local hospital to be one of the largest employers in the region.

Healthcare jobs provide a clean and safe working environment and they pay better than other sectors, particularly for skilled clinicians and administrators.

They tend to offer decent benefits, including health insurance, which means that the public doesn't have to subsidize labor costs (at least not directly) as it often does in the service industry for low-end retail and fast food workers

About 60 cents or more of each healthcare dollar goes toward employee compensation. That's money that is often immediately circulated back into local economies in the form of car payments, groceries, durable goods, movie tickets, restaurant tabs, and property and sales taxes.

Of course, there are downsides to high job growth in healthcare. The United States spends far more on healthcare than any other advanced nation on earth. The approximately $3.2 trillion in healthcare expenditures each year accounts for nearly 18% of the gross domestic product. Every dollar spent on healthcare is one dollar that is not spent on education, or infrastructure, or public safety or other vital needs.

Projected Consequences of Repeal
President-elect Donald Trump and the Republican-controlled Congress have vowed to repeal the ACA as soon as possible, even though they have no plans for how to replace it.

With that in mind, a study from the Milken Institute School of Public Health at the George Washington University and The Commonwealth Fund offers some troubling projections if Congress repeals two key provisions of the ACA: Medicaid expansion; and the premium tax credits used to subsidize health insurance premiums for low- and middle-income people.

According to the study, if just those two provisions are eliminated:

  • About 2.6 million jobs will be lost across all 50 states and the District of Columbia in 2019. Job losses would affect every state, but 10 would suffer the biggest hits: California (334,000 jobs), Florida (181,000), Texas (175,000), Pennsylvania (137,000), New York (131,000), Ohio (126,000), Illinois (114,000), Michigan (102,000), New Jersey (86,000), and North Carolina (76,000).
     
  • One-third (912,000) of the total 2.6 million job losses would be concentrated in healthcare; nurses, health technicians, and other medical personnel would likely be laid off in 2019. 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. States could be juggling painful choices about what services to cut or whether to raise tax rates to maintain a safety net for their residents.
     
  • 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 non-expansion states.

By all means, let's have a debate on the Affordable Care Act. Congress and the Trump Administration should try to find a workable alternative, or improve upon what's already out there. Vice President-elect Mike Pence, for example, implemented a market-based Medicaid expansion in Indiana when he was governor there. We can debate the merits of the plan, but at least it appears to be a legitimate attempt to find a solution.

It is ridiculous to argue, however, that it's sound, responsible public policy to repeal the massive, sweeping, complicated ACA without an inkling of how you'll replace it.

In the coming weeks, expect to see more studies and projections about the potential for disaster if the ACA is taken out with nothing to replace it.

John Commins is a content specialist and online news editor for HealthLeaders, a Simplify Compliance brand.


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