Repealing Federal Health Reform: Economic and Employment Consequences for States

Issue: The incoming Trump administration and Republicans in Congress are seeking to repeal the Affordable Care Act (ACA), likely beginning with the law’s insurance premium tax credits and expansion of Medicaid eligibility. Research shows that the loss of these two provisions would lead to a doubling of the number of uninsured, higher uncompensated care costs for providers, and higher taxes for low-income Americans. Goal: To determine the state-by-state effect of repeal on employment and economic activity. Methods: A multistate economic forecasting model (PI+ from Regional Economic Models, Inc.) was used to quantify for each state the effects of the federal spending cuts. Findings and Conclusions: Repeal results in a $140 billion loss in federal funding for health care in 2019, leading to the loss of 2.6 million jobs (mostly in the private sector) that year across all states. A third of lost jobs are in health care, with the majority in other industries. If replacement policies are not in place, there will be a cumulative $1.5 trillion loss in gross state products and a $2.6 trillion reduction in business output from 2019 to 2023. States and health care providers will be particularly hard hit by the funding cuts.