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From Health Reform WK-EDGE, July 17, 2017

Economic, job losses predicted with BCRA

By Anthony H. Nguyen, J.D.

The Better Care Reconciliation Act (BCRA), the Senate alternative to the American Health Care Act (AHCA), would lead to significantly larger job losses and reductions in states’ economies by 2026, if passed into law. Both bills seek to partially repeal and replace the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148). According to an issue brief by the Commonwealth Fund, both the draft BCRA and the AHCA, which passed the House earlier (see The AHCA strikes back, May 4, 2017), would have similar effects on the number of uninsured Americans. The Congressional Budget Office (CBO) estimated that this draft version of the BCRA would lead to 22 million fewer insured Americans by 2026, roughly the same as the 24 million uninsured estimated for the AHCA (see BCRA would curb Medicaid spending growth, increase uninsured numbers, June 30, 2017; Revised AHCA costlier with same number of uninsured, March 24, 2017).

The issue brief noted that, generally, federal health funds are used to purchase health care, with fiscal effects from these purchases spreading throughout the rest of the economy by creating jobs and other economic growth. Federal health funds pay hospitals, doctors’ offices, and other providers; these facilities use revenue to pay their employees and buy goods and services, such as rent or equipment. In turn, health care employees or other businesses (and eventually their workers) use their income to purchase consumer goods like housing, transportation, or food. An analogous effect is when federal taxes are reduced, the expectation is that consumers or businesses retain income and purchase goods and services, invest, or save.

Impact on jobs. The Commonwealth Fund noted that Medicaid expansion states would be hardest hit under the BCRA. In terms of job creation or losses, the proposed BCRA would add over 750,000 jobs in 2018, but employment would then deteriorate. It is projected that in 2026, under the BCRA, there would be 1.45 million fewer jobs with the health care sector bearing the brunt of the losses at over 900,000 fewer jobs. State coffers would be reduced by $162 billion.

BCRA would repeal a number of taxes along with a phase-in of coverage-related spending reductions, including Medicaid. The tax repeals would increase federal deficits by more than $50 billion in 2018 and 2019. However, as noted, the number of jobs outside of the health care sector in 2018 would rise. Health care sector jobs would fall immediately with the loss of 30,000 jobs.

By 2026, 1.45 million fewer people would have jobs. Additionally, gross state products would drop by $162 billion and business output would be $265 billion lower, while overall 919,000 jobs would be lost in health care. The issue brief estimated that more than 534,000 jobs in other sectors, including construction, real estate, finance, retail trade, and public employment, would be lost by 2026.

States that expanded Medicaid were estimated to have deeper and faster losses. Having earned more federal funds under the ACA, these states lose more when Medicaid matching rates are cut. In addition to cutting funds to states that expanded health insurance for low-income Medicaid populations, BCRA also increases funding to states that did not expand Medicaid. Nonetheless, the issue brief noted that states that did not expand Medicaid, like Florida and Maine, would also experience job and economic losses after a few years. For instance, Florida would have the sixth highest level of job loss in the nation by 2026.

Legislation: FederalLegislation AccessNews AgencyNews MedicarePartANews MedicarePartBNews MedicarePartCNews MedicarePartDNews PremiumNews PremiumTaxNews MedicaidNews FedTracker HealthCare NewsFeed TrumpAdministrationNews

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