Repealing Obamacare could cost 3 million jobs, study finds
10:16 PM, Jan 5, 2017
2:09 AM, Jan 6, 2017
NEW YORK (CNNMoney) -- Congress has another reason not to roll back Obamacare too quickly: New research suggests that repealing two major provisions of Obamacare without replacing them right away could cost the nation 3 million jobs and trigger negative economic impacts that would extend far beyond the health care industry.
The report was released Thursday by the Commonwealth Fund and George Washington University's Milken Institute School of Public Health. It assumes Congress will gut two key provisions of the Affordable Care Act -- subsidies that help low- and moderate-income people pay for coverage and Medicaid expansion -- and that Congress won't put a replacement plan in place.
If that happens, it would set off a chain reaction that could cost America an estimated 2.6 million jobs in 2019 alone, the report said. And these losses could rise to nearly 3 million by 2021.
The federal government funds both state Medicaid expansion programs and the Obamacare premium subsidies. This money eventually flows to insurers and providers, including hospitals, clinics, pharmacies and other medical facilities. It's used to purchase medical equipment and other goods and to pay staff and vendors.
When these funds are cut, insurers and providers could be forced to cut staff and may not be able to afford to pay their vendors. And those former workers now have less spending power -- triggering ripple effects throughout the economy.
That means state and local governments wouldn't be able to collect as much in tax revenue. The report estimates the fallout could be about $48 billion of forgone tax revenue over the course of five years.
"There have been other analyses that point out that a lot of people will lose their insurance [if Obamacare is repealed], but people have not discussed this broader economic impact," Leighton Ku, the report's lead author, told CNNMoney.
"The incoming administration is 'pro-growth,' but it causes concerns that one of the first things that comes up on the agenda is something that is anti-growth and will actually cost millions of jobs," Ku added.
There is, of course, the chance that Congress won't implement a repeal until there's a replacement plan in place. Joe Antos, a health policy expert at American Enterprise Institute, said it's "unrealistic" to assume otherwise.
If anything, Antos said he thinks Congress will wind up approving more federal health care spending, not less -- but Republicans will likely divert funds away from certain spending practices they disdain, such as the Medicaid expansion.
But if Congress' replacement for Obamacare does involve more spending, it could blow a massive hole in the federal budget.
A separate report by the bipartisan Committee for a Responsible Federal Budget found it would cost $350 billion to do away with the coverage provisions, taxes and Medicare expansion implemented by Obamacare -- and that doesn't include the cost of a replacement measure.
As of now, it's all hypothetical. Republicans have yet to reach an agreement on the timing of the repeal, and the party does not appear to be close to reaching a consensus on how to replace the health reform law.