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BCRA would damage employment and state economies, Commonwealth Fund finds

Employment in healthcare would be hit especially hard, with 919,000 fewer jobs.

Jeff Lagasse, Editor

The Better Care Reconciliation Act, the Senate's alternative to the House-passed American Health Care Act, would likely result in 22 million more uninsured by 2026, according to the Congressional Budget Office. A Commonwealth Fund study, however, finds that the effects could be far deeper, leading to larger job losses and deeper reductions in state economies over that time.

If the bill is enacted into law, employment would spike briefly, with 753,000 jobs added in 2018, according to the analysis. But employment would then deteriorate sharply. By 2026, 1.45 million fewer jobs would exist, compared to levels under current law. Every state except Hawaii would have fewer jobs and a weaker economy.

Employment in healthcare would be hit especially hard, with 919,000 fewer jobs, and gross state products would be $162 billion lower in 2026. States that expanded Medicaid under the Affordable Care Act would likely be hit hardest.

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The economic consequences for states would be much harsher than under the AHCA, for three principal reasons. First, although the BCRA delays the phasing-down of federal matching for Medicaid expansions, in had deeper Medicaid reductions than the AHCA by 2026.

Second, the changes in premium tax credits result in deeper federal expenditure cuts. That's because the BCRA provides tax assistance to nearly as many people as the AHCA, but the value of the assistance is lower due to the actuarial value benchmark being lowered, especially for older Americans. As a result, the insurance coverage will offer less protection from high deductibles and cost sharing.

The BCRA also reduces the threshold of the medical care deduction from 10 to 7.5 percent, while the AHCA reduced it to 5.8 percent.

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The Commonwealth Fund pointed to the multiplier effect -- the idea that fiscal effects ripple out through the rest of the economy. In addition to the 1.45 million fewer jobs under the BCRA, the analysis projects that gross state products would dip by $162 billion and business output would be $265 billion lower. Due to the multiplier effect, more than half a million of the jobs lost would be in non-healthcare sectors, including construction and real estate, finance, retail and public employment. And the downward trends would continue past 2026.

The study said Medicaid expansion states would experience deeper and faster economic declines, although non-expansion states would incur substantial losses as well.

Twitter: @JELagasse