Repeal of ‘Obamacare’ would cause job losses and a ‘$5 billion hole’ in the Arizona economy

Whenever you talk about healthcare in the United States, keep in mind that it currently makes up 17 percent of the nation’s GDP, and represents the fastest growing sector of the economy. Healthcare to Become the Largest Employment Sector of the U.S. Economy: According to the Bureau of Labor Statistics, healthcare jobs and industries are “expected to have the fastest employment growth and to add the most jobs between 2014 and 2024.”

An analysis by the Kaiser Family Foundation found that 6.3 million of the 11.5 million Americans who used the ACA marketplace to buy their insurance last year live in Republican Congressional districts.

Policy analysts say that a rollback of the ACA would hurt older and rural Americans — the two populations that favored Donald Trump over Hillary Clinton in the presidential election. Trump Voters Stand to Suffer Most From Obamacare Repeal:

Donald Trump’s most ardent supporters are likely to be hit the hardest if he makes good on his promise to dismantle the Affordable Care Act[.]

“I think you’re going to get a disproportionate impact on people who supported Donald Trump but maybe don’t realize that his policies may end up hurting them instead of helping them,” said Michael O. Moore, a professor of economics and international affairs at George Washington University.

One of these “red” states is Arizona, and there is a new study from Seidman Research Institute as to just how much damage repeal of “Obamacare” would cause in this state. Study: $5 billion, 62,000 Arizona jobs at risk if ‘Obamacare’ repealed:

If Arizona loses all Affordable Care Act funding now funneled to patients, doctors, insurers and hospitals, it would create a nearly $5 billion hole in the state’s economy and cost more than 62,000 jobs next year, according to a new report.

That is the worst-case scenario outlined in a report commissioned by Children’s Action Alliance and completed by the Seidman Research Institute at Arizona State University. The report projected a slightly smaller dip in job creation and economic impact if federal funding disappears but the state keeps its current funding level for health care or redirects similar spending elsewhere.

Either scenario, however, could create something that Arizona has not experienced as far back as health job statistics reach — a “health-care recession,” according to ASU economist Lee McPheters.

“Health care over the last 20 years has been the most dynamic sector of the entire economy,” said McPheters, director of the JPMorgan Chase Economic Outlook Center at ASU’s W.P. Carey School of Business. “This is the only industry that has grown uninterrupted since 1965.”

The Affordable Care Act, also known as “Obamacare,” has infused significant funding into Arizona, mainly through the expansion of Medicaid and tax credits that help low- to moderate-income earners purchase subsidized insurance coverage on the federal marketplace.

If ACA-related federal and state funding is removed from the state’s economy, the report said, it would cause Arizona to lose 29,461 health-care jobs in 2018. That loss of generally higher-wage health jobs would ripple through other industries, such as health suppliers and service sectors, resulting in 62,659 fewer jobs statewide, according to the report.

That would reduce the state’s “gross state product” by nearly $5 billion and reduce personal income by nearly $3.5 billion.

The report said the absence of ACA funding could cost nearly 718,000 jobs and more than $60 billion to the state’s economy over the next decade.

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Children’s Action Alliance officials said the organization commissioned the report to give Arizona’s congressional delegation and state lawmakers a broader look at the potential economic impact of the health law’s repeal.

“We are concerned about the impact on families, children and health care,” said Dana Wolfe Naimark, CEO of Children’s Action Alliance. “We hope this brings a broader understanding on how much Arizonans are currently counting on the provisions of the ACA and how much our economy has been affected by it.”

There have been several national projections on how a repeal of the health-care law would trickle down to Arizona. For example, the Commonwealth Fund last month projected that a repeal would cost Arizona nearly 34,000 jobs by 2019, a more conservative estimate than ASU’s projection.

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While Gov. Doug Ducey has advocated for repeal of the health law, he also urged Congress to adopt a transition period of two to three years that allowed people to continue to collect Obamacare subsidies to purchase health coverage.

Some Republican lawmakers have slowed down talk of an immediate ACA repeal without consensus on a replacement. Even President Donald Trump has recast expectations for a speedy repeal. However, some members of the House Freedom Caucus are pushing for a full repeal over the coming months. (See yesterday’s post, GOP has no ‘Obamacare’ replacement plan as repeal falters.)

In a letter last month to House Majority Leader Kevin McCarthy, Ducey’s advisers warned that if Congress adopts a block-grant or per-capita funding formula for Medicaid, it could “result in the single largest transfer of risk ever from the federal government to the states.”

It’s almost as if Gov. Ducey isn’t aware that this has been the long-term goal of the GOP for years. Well here’s some remedial reading for you, Guv. GOP Medicaid plan could mean big trouble for states:

Republicans have touted block grants for decades as a cost-saving solution that not only saves money but also gives states more flexibility to redesign their Medicaid programs with limited federal interference.

But the drastic change would mean dramatic changes in Medicaid. It would no longer guarantee coverage for all who qualify, and program eligibility and coverage rules would have be restructured.

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When millions of Americans lost their jobs and their health insurance in the Great Recession, Medicaid opened its arms, adding 6.7 million members from December 2008 to December 2010.

Medicaid’s open-ended federal funding helped pay for that 15 percent growth, ensuring coverage for all eligible applicants.

But under proposals from congressional Republicans, Medicaid beneficiaries would no longer automatically get that federal funding when enrollment spikes.

If approved by Congress, “block grants” would give states a fixed amount of federal dollars each year to run Medicaid, the state- and federally funded health plan for poor people and those with disabilities.

House Speaker Paul Ryan, R-Wis., and Rep. Tom Price, R-Ga., President Donald Trump’s nominee for health and human services secretary, have backed block grants for Medicaid. The Trump administration has signaled its support as well.

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When Ryan offered a similar plan in 2011, the nonpartisan Congressional Budget Office found it would cut federal Medicaid spending by 35 percent from 2013 to 2022. To make up for the lost funding, states would have had to consider raising taxes, cutting spending in other programs or cutting benefits and limiting enrollment in Medicaid, the CBO found.

Block grants would also leave Medicaid programs with no financial flexibility to handle emergencies like an unexpected increase in higher-cost medical services or enrollment spikes during economic downturns – like the Great Recession.

“All of the major block-grant proposals that we’ve seen in the last few years involved huge cuts to the Medicaid program. Cuts that would render it a shadow of its former self,” said Joan Alker, executive director of the Center for Children and Families at Georgetown University.

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“When proponents of block grants talk about ‘more flexibility,’ they’re talking about eliminating federal benefit standards, federal cost-sharing protections and other requirements” that come with receipt of federal money, Alker said.

In addition, states already have the flexibility to redesign their programs through special waivers of certain Medicaid rules, said Colleen Grogan, professor of health policy and politics at the University of Chicago.

“So do we really need a block grant to give states flexibility? No. We don’t,” Grogan said. “The block grant is really about controlling the financing and, because it’s a fixed amount, then controlling enrollment in Medicaid.”

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Because block grants don’t adjust for unexpected Medicaid enrollment increases and would cause a political brawl over how much states should receive, Gail Wilensky, a senior fellow at Project HOPE who ran the Medicaid program from 1990 to 1992 under President George H.W. Bush, supports federal funding for Medicaid through a “per capita cap” that provides funds for each beneficiary up to a specified amount. Like block grants, the legislative fate of per capita caps is uncertain.

Per capita caps, unlike block grants, would adjust for Medicaid enrollment increases, but not for unexpected cost increases.

[But] a recent report by The Commonwealth Fund said the caps “fail to take into account that even within a single beneficiary category, some individuals are much more expensive to cover than others.”

[Here is another recent study from The Kaiser Family Foundation, Overview of Medicaid Per Capita Cap Proposals.]

Under Ryan’s “A Better Way” proposal, states that opt for Medicaid funding through federal per capita caps – rather than block grants – would apply different funding thresholds for the four major program enrollees: children, adults, the elderly and people with disabilities.

“The fundamental difference between a ‘per capita cap’ and a state block grant is that per capita caps accept the basic reality that the cost of care for an 80-year old disabled senior is way more expensive than the cost of care for a healthy 12-year-old child in poverty,” said Jeff Myers, president and CEO of Medicaid Health Plans of America.

Myers said he thought it was “highly unlikely” that Medicaid would be block-granted. Any change in the program’s funding structure will likely involve either a change in the federal matching rate or through per capita caps, he said.

Tea-Publicans are post-policy nihilists. They don’t do policy, they do propaganda. They don’t have a clue how to do healthcare policy, and whatever they will wind up doing is certain to make healthcare worse and cause harm to the most vulnerable Americans and the economy.