President-elect Donald Trump and Congressional Republicans have made clear their intentions to repeal the Affordable Care Act, but a new analysis from the Commonwealth Fund finds that repeal, without a replacement, would result in a $140 billion loss in federal funding for healthcare in 2019, leading to the loss of 2.6 million jobs, most of them in the private sector.
Without replacement policies in place, there would be a cumulative $1.5 trillion loss in gross state products and a $2.6 million reduction in business output from 2019 to 2023, the analysis shows. The state, and healthcare providers, would be particularly hard-hit.
Congress and the new administration would likely begin by targeting the ACA’s insurance premium tax credits and the expansion of Medicaid eligibility. Commonwealth’s research shows that the loss of those two provisions would double the number of the uninsured, cause higher uncompensated care costs for providers and hike taxes for lower-income Americans.
Healthcare will comprise almost one-fifth of the nation’s economy by 2019, so major changes to the healthcare landscape would reverberate across other parts of the economy.
To track this, Commonwealth analyzed funding flows from the federal government to states, consumers and businesses. Federal tax credits first flow to health insurers. Most of that money, aside from overhead, goes to hospitals, clinics, pharmacies and other providers. Those are the direct effects of federal funding.
Most of the revenue earned by providers is used to hire staff and pay for goods and services, like clinic space or medical equipment. In turn, those vendors pay their employees, and additional goods and services. Those are the indirect effects.
Lastly, the workers use their incomes to pay for food, mortgages, rent, transportation, etc., which provides income to other business and industries. Those are the induced effects. When federal funds are cut, it triggers losses in employment and economic activity.
