When the Affordable Care Act (aka “Obamacare”) was enacted in the United States in 2010, it started a historic overhaul to the country’s medical insurance system, built on a belief that more people from more backgrounds should face fewer barriers and lower costs to getting insured.
Reports on the law’s impact have generally labeled it a success, as the number of uninsured has dropped from 41.3 million in 2013 to 28 million in 2016. But with the Republican-controlled Senate moving forward with a repeal of the act, states that have expanded coverage and seen greater reimbursements by federal dollars under ACA could face steep cuts and trouble for local economies.
A recent report by the Economic Policy Institute argues that repealing the ACA could leave U.S. taxpayers with a hefty check, and in 2019 alone, reduce job growth by 1.2 million and federal spending by about $103 billion. Researcher Josh Bivens says the move will disproportionately affect low- and middle-income Americans and reduce spending power for the majority of earners in a given state.
If as a result of a repeal, consumers spend less on everything from groceries to cars, then workers in generally low-entry jobs, like cashiers and line manufacturers, would be at risk for getting dropped from the workplace due to lower company profits.
“Even when [ACA] was fully implemented in 2014, there was this sense at that point that the economy was going to be completely healed [in a few years],” says Bivens, referring to recovery from last decade’s recession. Democratic lawmakers, who passed the act when they held a majority in both the House of Representatives and the Senate, hoped that their country would be at peak consumer spending and stable employment levels near the middle of the decade.
“That was obviously wrong,” he says. A jobs report from January confirms that U.S. employment numbers grew steadily the last six years President Barack Obama was in the White House, but growth has still been below the bar of economists’ expectations. In the EPI report, Bivens notes that “households, businesses, and governments […] are still spending less than what the economy could produce if all resources (including workers) were fully employed.”
“We’re a little closer to full health, but it’s still the case that there’s a fragile enough economy that this sudden contraction is probably going to slow the economy down and notch jobs,” he says. States that opted to expand the state and federally funded health insurance program Medicaid to cover anyone making less than 138 percent of the federal poverty line are likely to suffer the most, he says, because they saw the biggest uptick in federal dollars with ACA.
According to the EPI report, the biggest losers would be: Arizona, Colorado, Kentucky, Louisiana, Maryland, Montana, Nevada, New Jersey, New Mexico and North Carolina.
Bivens’ research doesn’t zoom in past the state level, but to get an image of how this could trickle down to America’s cities, it’s worth taking a look at data he crunched for Washington, D.C. The district’s employment rate, according to his research on ACA repeal, would drop by about 0.2 percent, which, when aligned with today’s numbers, would bring it up to 6.0 percent unemployment.
That means 1,466 jobs, or about 1.9 out of every 1,000 jobs in the district.
The number of people without health coverage would also jump up significantly. With 32,000 at risk of losing their insurance, the district’s uninsured population would increase by about 103 percent.
While it’s possible that economic losses would be mitigated by whatever might replace the ACA, a co-author of the Berkeley report told the East Bay Express recently, “We couldn’t model for a replacement plan, because there isn’t a consensus on what that would have looked like.”
Bivens says if states want to mitigate the impact, their first option is to get political and start lobbying state representatives against the repeal. If that doesn’t work, he says they can start looking into bolstering their own Medicare and Medicaid provisions.
“Even without the ACA expansion into Medicaid, states can unilaterally make state Medicaid programs more generous and that will bring in more federal dollars to them,” he says. Vermont and Hawaii, for example, enacted some of the fastest Medicaid expansions in the country between 1992 and 2002, and their insurance enrollment numbers among impoverished communities spiked at a remarkable pace. The federal government pays a dollar for every dollar states spend on the program.
“It’s not as good of a deal as the 100 percent matching funds that were part of the ACA expansion,” says Bivens. “But it’s still a sharper trade-off than before.”
In late January, several U.S. mayors, including NYC’s Bill de Blasio and L.A.’s Eric Garcetti, wrote a letter to congressional leaders urging them to consider carefully the impact of ACA repeal, stating, “It is our cities and counties that will see increases in indigent care costs for our hospitals, in uninsured rates and uncompensated care costs; and it is our low and moderate income residents who will return to a time of having to choose between health care and everyday living expenses, like groceries.”
The Equity Factor is made possible with the support of the Surdna Foundation.