Opinion, Berkeley Blogs

550,000 fewer California jobs projected under last-ditch GOP health bill in 2027

By Laurel Lucia

Co-authored by Laurel Lucia, Ian Perry and Ken Jacobs; crossposted from the blog of the UC Berkeley Labor Center .

BREAKING NEWS: Senate Majority Leader McConnell announced today that he will not schedule a vote on Graham-Cassidy. However, attempts to repeal the Affordable Care Act are not over. Says McConnell , “We haven't given up on changing the American health care system. We aren't going to be able to do it this week."

This week the Senate may vote on a bill sponsored by Senators Graham, Cassidy, Heller, and Johnson that would entirely eliminate funding for the Affordable Care Act’s Medicaid expansion and private insurance subsidies in 2027, in addition to making massive funding cuts to the broader Medicaid program. The bill would especially harm state budgets and coverage rates in states like California that have maximized health coverage gains under the ACA. It would reduce federal funding to California by $53.1 billion in 2027 alone, according to new estimates by the California Department of Health Care Services. We recently estimated that 6.7 million Californians could lose coverage under the bill.

California’s economy would also be disproportionately and severely damaged should this bill become law. We project that in 2027 the state would have 550,000 fewer jobs, $60.4 billion less in state GDP and $4.4 billion less in state and local tax revenue , compared to under current law. These projections are based on our analysis using IMPLAN economic modeling software. As with the federal funding and coverage losses that would occur in California under Graham-Cassidy, the job loss would be much more severe than those projected under previous ACA repeal proposals considered by Senate Republicans this year. (See our past analysis and analyses by researchers at George Washington University and the Economic Policy Institute on other ACA repeal bills considered by Congress this year.)

Especially hurt by this job loss would be the parts of the state with the highest ACA enrollment, including the Central Valley, Imperial Valley, and parts of Los Angeles.

INTERACTIVE MAPS: Projected job loss under Graham-Cassidy by California county and congressional district, 2027

Click on the image to view the interactive maps by California county and California congressional district to see projected job losses under the Graham-Cassidy bill.

Statewide, the job loss projected under Graham-Cassidy is equivalent to a 3.4% decrease in the number of jobs California is predicted to have in 2027. For context, this ranks between the jobs lost in California during the worst of the 2001 and 1990 recessions, 1.8% and 4.1%, respectively, according to estimates by the UC Berkeley Center on Wage & Employment Dynamics using Current Employment Statistics.

Though our estimates focus on 2027, the job loss under Graham-Cassidy would phase in over the next decade, beginning in 2018 with the anticipated destabilization of the individual market and resulting loss of coverage due to the repeal of the individual mandate. The job loss would accelerate in 2020, when the federal funding that California would otherwise receive under the ACA would be converted to a block grant and reduced and when the caps on federal spending per Medicaid enrollee would commence. The job loss would grow further in 2027, when the block grant funding that replaces the Medi-Cal expansion and the subsidies through Covered California would be eliminated completely.

Most of the lost jobs—320,000—would be in the health care industry, including jobs at hospitals, clinics and doctors’ offices, labs, other health care settings, and insurance companies. Nursing home and home care workers would also be at risk of job loss because the Graham-Cassidy provisions capping federal Medi-Cal spending per enrollee would apply to seniors and individuals with disabilities in addition to children and other adults. The projected loss in health care jobs reflects the elimination of some jobs that exist today and fewer new jobs created due to slower-than-expected job growth.

The health care industry is an important segment of the California economy with nearly one in ten jobs. The industry has been a significant source of employment growth since the start of recession, in part due to the increased demand for health care services under the ACA. A number of health care occupations offer wages that support middle-class families. Hundreds of thousands of hospital, clinic, nursing home, and home care workers in the state are represented by unions.

Employment in non-health care industries would be reduced by 230,000 jobs due to economic spillover effects. In particular, job loss would be most likely to occur at businesses that are suppliers of the health care industry, such as food service, janitorial, and accounting firms, and at local businesses at which health care workers spend their income, such as restaurants and retail stores.

These are net job loss estimates and reflect that the loss of 580,000 jobs due to the eliminated health care spending would be minimally offset by economic gains from the repeal of certain ACA taxes, which would add 30,000 new jobs and keep an estimated $4.3 billion within the state. Graham-Cassidy would repeal the penalty some individuals pay for not having insurance, the requirement that large employers offer affordable health insurance to their full-time employees or pay a penalty, the medical device excise tax, and certain provisions related to Health Savings Accounts. As a result, certain California households and businesses would have additional income, leading to some increased spending and additional jobs in their local communities. The impact is limited, though, for two reasons: the value of the tax and penalty repeals is substantially less than the value of the health care spending cut, and health care spending cuts have a more severe impact on jobs than equivalent tax increases.

If Graham-Cassidy is enacted, not only would Californians be justifiably anxious about losing their health coverage, they would also have good reason to worry about losing their jobs.