Repeal of Affordable Care Act will mean economic losses for state, study predicts

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Repeal of the Affordable Care Act could mean the loss of 209,000 jobs and $20.3 billion in GDP for California, a study by UC Berkeley’s Center for Labor Research and Education has found.

The December study comes amid growing concerns that Donald Trump’s election to the presidency could mean the end of the ACA — a promise he made throughout his campaign. The act’s repeal would bring about the loss of coverage for 3.7 million Californians enrolled in the Medi-Cal expansion and the loss of $20.5 billion in annual federal funding for the Medi-Cal expansion and subsidies for Covered California, the report said.

The Medi-Cal expansion, which extends eligibility for Medicaid, and Covered California subsidies, which make coverage more affordable for those enrolled, are ACA provisions that receive $15.5 billion and $5 billion in federal funding, respectively.

“Repealing the Affordable Care Act would not only take insurance for many of Californians, but it would also harm the California economy,” said Laurel Lucia, co-author of the report and health care program manager at UC Berkeley’s labor research center.

A combination of tax cuts, the loss of federal healthcare spending and the removal of penalties brought about by the ACA repeal would also result in a loss of $1.5 billion in state and local tax revenue, according to the study.

The report further indicated that the health care industry would experience the most significant job loss, accounting for 135,000 of the projected 209,000 lost jobs, were the ACA to be repealed. Other industries predicted to be affected by job loss include restaurants, real estate, insurance agencies and employment services.

“(The study) has to make a number of assumptions, which is required here because we don’t know what repeal would look like,” said Jonathan Kolstad, assistant professor at UC Berkeley’s Haas School of Business. “We should take away (from the study) that there is a lot to be lost from any repeal, but also thinking about how the state is going to respond to potentially reduce some of the effect.”

Counties in the Central Valley are expected to be especially impacted by the ACA repeal, as many have high Medi-Cal enrollment and high unemployment rates, the report said. The study projects the loss of thousands of jobs within these counties and a loss of 63,000 jobs in Los Angeles County alone.

The report also notes that the economic losses California would suffer would be partially offset by an estimated $7.6 billion generated through a combination of tax cuts for insurers and high-income households, and the removal of penalties for those without insurance and employers who do not provide affordable coverage.

Since ACA was first implemented in 2010, California has experienced an addition of 367,000 jobs to the health care industry and a drop in the state’s uninsured rate from 17.2 percent in 2013 to 8.6 percent in 2015. According to the report, the act helped to stimulate the state’s economy in the period after the 2008 recession.

“I think the point that comes out of the study … is California has really, really benefited from this policy,” Kolstad said.

Contact Sydney Fix at [email protected] and follow her on Twitter at @sydney_fix.