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GOP Health Care Law Could Cost Nearly 1 Million Jobs, Report Finds

The GOP American Health Care Act will cut spending and cost up to 1 million jobs, experts at the Commonwealth Fund and George Washington University found.
Image: Paul Ryan, House Leaders Hold Press Conference On American Health Care Act
Speaker of the House Paul Ryan holds up a copy of the American Health Care Act during a news conference with House Majority Leader Kevin McCarthy on March 7.Chip Somodevilla / Getty Images, file

The American Health Care Act, the GOP’s answer to Obamacare, could end up costing the U.S. economy close to 1 million jobs, researchers predicted Wednesday.

The bill, if passed as written by the House of Representatives, would start out boosting jobs and increasing economic output because it would cut taxes, the team at George Washington and The Commonwealth Fund found.

But that would change fast, the experts forecast.

“The AHCA would initially cause a brief spurt of economic growth from tax cuts, which primarily help those with high incomes,” said Leighton Ku, director of the Center for Health Policy Research at the Milken Institute School of Public Health at GW, who led the study team.

“However, cuts in funding for Medicaid and health subsidies then begin to deepen, triggering sharp job losses and broad disruption of state economies in the following years,” Ku added.

“Within a decade, almost a million fewer people would have jobs. The downturn would hit the health care sector and states that expanded Medicaid the hardest.”

Related: Here's What the AHCA Would Do

Health care has added an average 22,000 jobs a month so far in 2017, compared to an average monthly gain of 32,000 in 2016,” the Bureau of Labor Statistics said in its May statement. That adds up to 329,000 jobs over the past year.

Image: Changes in Total and Health Care Employment Due to the American Health Care Act, 2018 to 2026
Changes in total and health care employment due to the American Health Care Act, 2018 to 2026George Washington University analysis

The more people who have health insurance, the more health care they seek.

The nonpartisan Congressional Budget Office projected last month that the AHCA would lead to 23 million people losing or opting out of health insurance by 2026 and would cut federal spending on health care by $1.1 trillion.

“Our estimates are based on changes in federal funding gained or lost to states, consumers, and businesses,” Wednesday's report reads.

“The AHCA significantly reduces federal funding for Medicaid. It lowers federal match funding for the 31 states and District of Columbia that expanded Medicaid, encouraging them to discontinue their expansions.”

The Center for Medicare and Medicaid Services, part of the U.S. Health and Human Services Department, has a much lower projection for how many people would lose or drop insurance. The CMS actuary calculates that 13 million fewer people would be covered in 2026 under the AHCA.

Related: Will Obamacare Repeal Cost Millions of Jobs?

Health care jobs are an enormous part of the U.S. economy — making for 18 percent of the total Gross Domestic Product or GDP. Hospitals, clinics, doctors and health care services are major sources of jobs, too.

The Senate is working on its own version of the AHCA and it would have to be reconciled with the House version. There’s been little information out of the Senate about what changes are planned for its version, which is being written entirely by the Republican majority.

Conservatives want to reduce federal spending to lower the deficit. Ku and colleagues note that will hit jobs on the state level.

“Federal health funds are used to purchase health care. Then, fiscal effects ripple out through the rest of the economy, creating employment and other economic growth. This phenomenon is called the multiplier effect,” the report reads.

“Health funds directly pay hospitals, doctors’ offices, and other providers; this is the direct effect of federal funding. These facilities use revenue to pay their employees and buy goods and services, such as rent or equipment; this is the indirect effect of the initial spending.”

Related: U.S. Health Spending Grew Especially Fast Last Year

When people spend less money, jobs can be lost.

That would happen in 2018 in 17 states, the report predicted.

By 2026 the 10 biggest losers would be:

  • New York (86,000 jobs lost)
  • Pennsylvania (85,000)
  • Florida (83,000)
  • Michigan (51,000)
  • Illinois (46,000)
  • New Jersey (42,000)
  • Ohio (42,000)
  • North Carolina (41,000)
  • California (32,000)
  • Tennessee (28,000)

“The Affordable Care Act enabled the U.S. to make substantial gains in health insurance coverage and led to nationwide improvements in health care access and affordability for millions of people,” said Commonwealth’s Sara Collins.

“The deep coverage losses projected under the American Health Care Act would be damaging both to the health of Americans and the state economies in which they work.”

The same team at Commonwealth and GW made similar predictions in January.

Either way, health care spending is likely to grow. CMS projected last February that health care spending will grow by an average of 5.6 percent a year over the next decade. The CMS report released Wednesday projects that health spending would account for 19.9 percent of GDP in 2026.