Views Differ on How ACA Repeal Could Affect Employment

While some businesses cut jobs due to the ACA, the health care sector grew

By Stephen Miller, CEBS Jan 17, 2017
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The repeal of key provisions of the Affordable Care Act (ACA), now being pursued by the Republican majority in Congress, could lead to significant economic disruption and substantial job losses in every state, some researchers believe. Or it could lead to job growth, others maintain, given that many companies say ACA coverage and compliance mandates led them to cut full-time jobs at their firms.

ACA Repeal Would Lead to Job Cuts

Opponents of repeal are pointing to a new study that shows, in the aftermath of ACA repeal, nearly 3 million people could lose their jobs in health care and related sectors by the year 2021.

The study, from the Milken Institute School of Public Health at The George Washington University and The Commonwealth Fund, a nonprofit foundation, examined the impact of a potential January 2019 repeal of the ACA's federal premium tax credits that help low- and moderate-income people purchase insurance and of Medicaid expansion under the ACA.

"Repealing [these] key parts of the ACA could trigger massive job losses and a slump in consumer and business spending," said lead author Leighton Ku, a professor of health policy and management at the Milken Institute.

The researchers found that possible effects of repealing the ACA include the following:

  • About 2.6 million jobs could be lost across all 50 states and the District of Columbia in 2019.

  • One-third (912,000) of those job losses would be concentrated in health care; nurses, health technicians and other medical personnel would likely be laid off.

ACA Passage Led to Job Cuts

Last fall, two companion surveys by the Federal Reserve Bank of New York showed that many companies were cutting jobs in response to rising costs associated with ACA compliance. The August 2016 Empire State Manufacturing Survey (of manufacturing executives in New York state) and the Business Leaders Survey (of business executives at service firms in New York state, northern New Jersey and southwestern Connecticut) asked respondents if they were making changes to their businesses owing to the effects of the ACA. In response:

  • Roughly 21 percent of manufacturers and 17 percent of service-sector firms said they were reducing the number of workers in response to the ACA.

  • Large majorities in both surveys said they were not changing the proportion of part-time workers who are not covered by the ACA or the amount of work outsourced to other firms.

Responses to these questions in both surveys were broadly similar to responses given in the New York Fed's August 2015 and 2014 surveys, the report noted.

Research posted in January by the free-market oriented American Action Forum in Washington, D.C., claims that the ACA "significantly diminished the number of business establishments and jobs nationwide. Across the country, small businesses (20-99 workers) lost 295,030 jobs, 10,130 business establishments and $4.7 billion in total wage earnings."

Separate survey findings released in December by nonprofit Transamerica Center for Health Studies found that 21 percent of companies thought the ACA had a negative impact on their business in 2016—up from 16 percent in 2015. Smaller companies were most likely to feel the ACA has had a negative impact.

But a September 2016 survey report by two nonprofit organizations, the Kaiser Family Foundation and the Health Research Educational Trust, reached different conclusions. This survey found that:

  • Only 4 percent of surveyed employers had reduced or planned to reduce the number of full-time employees that they intended to hire because of the cost of providing health benefits to them.

  • 2 percent said they changed or planned to change the job classifications of some employees from full time to part time so that they would not be eligible for health benefits.

[SHRM members-only HR Q&A: How do we calculate the average hours worked to determine the number of full-time equivalents under the Patient Protection and Affordable Care Act?]

Eye of the Beholder

The results from these surveys don't show how many employees might have been hired but weren't because of costs related to the ACA, which is another subject about which supporters and opponents of the health care reform law disagree.

"Whatever the employment numbers, there would be more jobs available and Americans would be producing more and earning higher incomes" if the health care reform law had not been enacted, said ACA critic Michael Cannon, director of health policy studies at the Cato Institute, a libertarian think tank in Washington, D.C.

Those claiming that the ACA will negatively impact employment levels often cite the Congressional Budget Office (CBO), which in 2014 issued an assessment of the ACA's likely effects on the labor market. The CBO stated that the ACA's "largest impacts will probably occur after 2016, once its major provisions have taken full effect." Taking the fully implemented ACA into account, the CBO concluded that the law would reduce overall hours worked in the U.S. economy by 1.5 percent to 2 percent from 2017 to 2024.

With conflicting survey findings and competing research claims, those believing ACA repeal would be a jobs booster or a jobs loser are likely to remain at odds.

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