The Senate’s healthcare overhaul bill, it turns out, could hurt the U.S. economy even more than its sister bill in the House.
A new analysis from George Washington University researchers predicts that the Better Care Reconciliation Act could result in 1.45 million fewer jobs by 2026 compared to current law. The report updates an earlier analysis that found the House’s bill—the American Health Care Act—could lead to 1 million fewer jobs by 2026.
In addition, gross state products would be $162 billion lower in 2026 under the BCRA than under current law, and business output would be $265 billion lower.
Similar to projections for the House bill, the BCRA would initially add jobs—in its case, 753,000 in 2018. That’s because the Senate bill’s tax cuts, which can boost employment and economic growth, are designed to kick in before reductions in health insurance subsidies.
In later years, though, employment would decline sharply as the bill’s changes to healthcare funding phase in, the report says. Simply put, greater federal spending on healthcare has a “multiplier effect” that both directly and indirectly spurs economic growth and employment—and cutting it does the opposite.
The healthcare sector would be “especially hard hit,” losing 919,000 jobs by 2026 under the Senate’s bill, the report notes. Comparatively, under the House bill, researchers estimated that the healthcare sector would lose 725,000 jobs in the same time period.
Those predictions come in the wake of a new jobs report from the Bureau of Labor and Statistics, which shows the healthcare industry was the biggest contributor to employment gains in June, adding 37,000 jobs. The healthcare sector has added average of 24,000 jobs per month in the first half of 2017.
As for why the researchers estimate the Senate’s bill will have harsher economic consequences than the House’s bill, they offer three reasons:
- The Senate bill implements deeper Medicaid spending reductions than the House’s measure, as the per capita cap system moves to a lower growth rate after 2025.
- The BCRA’s changes in premium tax credits would result in deeper federal spending cuts than under the AHCA. While the BCRA provides tax assistance to almost as many people as the AHCA, the value of that assistance is much lower because the bill lowers the actuarial value benchmark, especially for older Americans.
- The BCRA reduces the threshold of the medical care deduction from 10% to 7.5%, while the AHCA reduced it to 5.8%.
Taken alongside the Congressional Budget Office’s estimate that the BCRA will swell the ranks of uninsured by 22 million people as of 2026, the researchers say their findings could have even more profound implications on the state level.
“The combination of more uninsured and more unemployed people will increase the demand for social assistance, but weaker state economies and federal reductions in Medicaid spending will make it more difficult for states to respond to those needs,” they write. As a result, “states will confront painful choices between raising taxes or slashing services.”