Study says health law repeal could cost California 334,000 jobs

Maya Sugarman/KPCC

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Repeal of the Affordable Care Act could spur the loss of an estimated 334,000 jobs in California, according to a new report from the Milken Institute School of Public Health at The George Washington University and The Commonwealth Fund.

The researchers analyzed the effect of eliminating and not replacing two key parts of the Affordable Care Act: the tax credits that help people with low and moderate incomes buy health insurance and the federal funding to support states’ expansion of Medicaid.

Repealing these policies could cause millions of Americans to lose their health insurance, according to the study. This would eventually force community clinics and hospitals to provide much more uncompensated care, it said.

That could lead to staff cutbacks, which would have a ripple effect on the broader economy, the report suggested. 

More than one-third of the jobs lost would be in healthcare, with the rest in construction, real estate, finance, insurance and other sectors, the study said.

"If there is a good, effective replacement plan [for the health law], the losses could be less," said Leighton Ku, director of The George Washington University’s Center for Health Policy Research and the report's lead author.

In California, more than 1 million people have bought health insurance - most with federal subsidies – through the Covered California exchange. The state has expanded Medi-Cal coverage to about 3.5 million poor adults.

California has had "fairly robust efforts to get people into Medi-Cal as well as into the state health exchange, and that's been beneficial to the state in terms of health insurance coverage and in terms of economic activity so far," Ku said. "That's why if these things go away, California ends up being a big loser."

As a result of these job losses, the report also predicted a loss of more than $207 billion in gross state product and a $6.8 billion reduction in state and local tax revenues between 2019 and 2023. Governments would also face increased demand for health care services from newly uninsured people, it said.

Chris Thornberg, founding partner of Beacon Economics and director of the Center for Economic Forecasting and Development at UC Riverside, said the researchers' estimate for job losses seems way too high.

He questioned the study's assumption that health care spending will decline in direct correlation to a loss in federal subsidies. Uninsured people will still utilize health care services at some level, so "to assume there will be a one-to-one reduction in health care expenditures relative to the reduction in federal subsidies is simply not realistic," said Thornberg.

"The hundred dollar question," he added, "is how much will they reduce their health care spending?"

A December report from the UC Berkeley Center for Labor Research and Education predicted about 209,000 jobs could be lost through partial repeal of the federal health law.

The Berkeley researchers concluded that most of the job losses would occur in the health care industry.