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The Senate’s Better Care Reconciliation Act Would Negatively Affect California’s Economy, Reduce the Number of Health Care Jobs

 

 

BY CONRAD AMENTA, DIRECTOR OF HEALTH POLICY

 

U.S. Senate leadership recently released the Better Care Reconciliation Act (BCRA) to repeal and replace the Affordable Care Act (ACA). The California Academy of Family Physicians (CAFP) released a statement strongly opposing the bill and the American Academy of Family Physicians confirmed that the “Senate Bill Does Not Serve Americans” because of its estimated impact on the number of uninsured: 49 million people (nearly 20 percent of the U.S. population) would be uninsured in ten years according to the Congressional Budget Office.

 

Much of the analysis of the BCRA has focused on the provisions of the bill that would decrease the number of insured Americans and the quality of their insurance. The overall economic impact of the BCRA is now coming into focus, however. A recent analysis by the Commonwealth Fund found that “While the draft BCRA and the [American Health Care Act, which was passed by the House and informed parts of the BCRA] would have similar effects on the number of uninsured Americans, the BCRA would lead to significantly larger job losses and deeper reductions in states’ economies by 2026.”

 

A 2016 five-year retrospective of the ACA, also by the Commonwealth Fund, found that the ACA “likely acted as an economic stimulus, in part by freeing up private and public resources for investment in jobs and production capacity,” while, at the same time, acting to slow the inflation in per-capita health care costs. The ACA achieved this, in part, by raising taxes and transferring the resultant revenues to states for the purposes of guaranteeing individuals a minimum standard of health insurance. The BCRA, if passed, would repeal the ACA’s taxes, roll back Medicaid, and reduce minimum quality standards for health insurance, thus also reversing some of the ACA’s economic gains.

 

Unsurprisingly, the effects of this reversal would be felt most immediately and deeply in the health care sector. One report found that expanded insurance coverage under the ACA explained an increase in health jobs. Another estimated as many as 240,000 well-paying health care jobs were created nationally as a result of the ACA. Conversely, under the BCRA, 30,000 health care jobs would be lost in 2018 and those losses would increase year-over-year, reaching 919,000 lost jobs in 2026. Other sectors of the economy would also be affected; after an initial increase in jobs in construction and real estate, retail trade, finance and insurance and all other private employment, job losses in each of those sectors would accelerate to a net loss of more than 1.45 million jobs by 2026:

 

 

The Commonwealth Fund goes on to say that the states that elected to expand their Medicaid programs under the ACA, such as California, would experience deeper and faster losses under the BCRA because they would lose greater sums of federal funds when Medicaid matching rates are cut. A state-by-state analysis of the economic impact of the BCRA, provided here, reveals that the overall effects of the BCRA - an initial increase in jobs followed by a swift and deep decline - also would be seen in California. An initial increase in jobs in 2018 and 2019 would quickly turn into year-over-year job losses from 2020 to 2026. In less than ten years, California would experience a net loss of 117,000 jobs:

 


* Status = ‘M’ indicates that California elected to expand Medicaid under the ACA 
Source: the Commonwealth Fund

 

The impact on health employment in California would be particularly severe: from 2018 to 2026, California would employ 93,500 fewer individuals in the health care sector due to the BCRA:

 


* Status = ‘M’ indicates that California elected to expand Medicaid under the ACA 
Source: the Commonwealth Fund

 

The BCRA also would have the potential to decrease job mobility. Evidence suggests that health insurance decreases what is sometimes called “job lock,” or the inability to change jobs for fear of losing one’s health insurance. When health insurance is guaranteed, regardless of one’s employer, labor mobility increases, especially among married young and low income taxpayers. One report suggested that the ACA acted to “‘unlock’ a job-locked individual by providing them a viable alternative to employer-sponsored health insurance,” allowing more Americans to start a business or move to a better job where health insurance was not issued. Removing the ACA’s protections may result in the reversal of this job mobility.

 

While the impact of the BCRA on the number of employed Americans and the degree of job mobility would be immediate and profound, the Commonwealth Fund also found that the impact on the overall economy could be felt for years to come. When individuals use federal funds to purchase health insurance, it produces what is called a “multiplier effect”: freed from the obligation to spend their disposable income on health insurance, individuals “purchase consumer goods like housing, transportation, or food, producing sales for a diverse range of businesses.” Without such federal assistance, California’s gross state product could decline by almost $13.5 billion and its business output could decline by $22.7 billion by 2026.

 

While Republicans have committed to repealing and replacing the ACA, it is becoming increasingly difficult to discern any positive effects the BCRA may have on the majority of Americans. Independent analyses have already established that fewer Americans would have health insurance coverage, and those who do would have more expensive insurance that covers fewer health services. One possible justification for the BCRA - that repealing the ACA’s taxes would spur economic growth, producing new jobs and higher wages, ultimately making it easier for Americans to afford housing, education, and nourishing food - now also is in question. Consensus is emerging that, as it is currently structured, the BCRA is highly unlikely to improve the health and well-being of Americans.