Click to access Californias-Projected-Economic-Losses-under-ACA-Repeal.pdf

If Congress follows through on President-elect Trump’s campaign promise to repeal the Affordable Care Act (ACA), 3.7 million Californians enrolled in the Medi-Cal expansion would lose that coverage,1 and another 1.2 million individuals enrolled through California’s health benefit exchange, Covered California, would lose federal subsidies to make private health insurance more affordable.2 These two ACA provisions are the largest drivers of the historic reduction in the state’s uninsured rate from 17.2% in 2013 to 8.6% in 2015.

Not only would repeal of the ACA reverse much of these coverage gains, but California would lose approximately $20.5 billion in annual federal funding for the Medi-Cal expansion and Covered California subsidies. The economic losses associated with these lost federal dollars would be partially offset by limited economic gains from other provisions that may be included as part of the repeal of the ACA, which could yield $6.3 billion in tax cuts to California insurers and high-income households and nearly $1.3 billion in eliminated penalties for uninsured individuals and employers not offering affordable coverage.

In this brief, we estimate the effects on employment, gross domestic product (GDP), and state and local tax revenue in California with the elimination of the major health insurance expansions, reduction in taxes, and removal of penalties under a partial repeal of the ACA. A summary of these estimates is shown in Exhibit 1. We also estimate losses for select medium and large counties that would be especially harmed economically by ACA repeal because of their high share of population (more than 10%) enrolled in the Medi-Cal expansion: Fresno, Kern, Los Angeles, San Bernardino, San Joaquin, Stanislaus, and Tulare Counties.

CONCLUSION

The ACA not only significantly expanded access to health insurance in California, but it also provided economic stimulus at a time when the state was still recovering from the Great Recession. As California is one of the states that made the greatest gains in health coverage under the ACA,16 it is also one of the states with the most to lose economically if key components of the ACA are repealed. The partial repeal of the ACA would not only lead to a substantial decline in health coverage in California, but it would also lead to significant economic losses, including more than 209,000 lost jobs, $20 billion in lost GDP, and $1.5 billion in lost state and local tax revenue. Some medium and large California counties’ economies – Fresno, Kern, San Bernardino, San Joaquin, Stanislaus, and Tulare – would be especially harmed due to their residents’ high level of reliance on the Medi-Cal expansion and above-average unemployment rates.