Enhanced premium subsidies for Affordable Care Act plans are set to expire at the end of this year, and, if they do, the financial impacts would be felt in all 50 states, according to a new report.
Researchers at the Commonwealth Fund and George Washington University's (GWU's) Milken Institute School of Public Health estimate that the end of the tax credits would cost states $34 billion in gross domestic product as well as more than $2 billion in tax revenue. The report also estimates it could lead to 286,000 job losses.
The study noted that states would lose out on $26.1 billion in federal subsidies in 2026, and those lost funds would compound over time. The states that would feel the pain the most are those that did not expand Medicaid, as the marketplace subsidies are critical to extending coverage to more people.
The 10 non-expansion states—Alabama, Florida, Georgia, Kansas, Mississippi, South Carolina, Tennessee, Texas, Wisconsin and Wyoming—would see 70% of the estimated job losses, according to the report, losing 194,000 jobs and $23 billion in GDP.
The study also estimates that hospitals and other providers would likely see notable revenue declines, particularly in rural areas and regions that rely heavily on Medicaid and exchange coverage.
“Eliminating federal premium tax credits will have serious economic repercussions nationwide," said Leighton Ku, Ph.D., the study's lead author, director of the Center for Health Policy Research and professor of health policy and management at GWU’s Milken Institute School of Public Health, in a press release. "States will face deep job losses, particularly in health care, along with billions in lost economic activity."
"Without these subsidies, families will struggle to afford coverage, businesses will take a hit, and state and local budgets will be stretched even thinner. The ripple effects will be felt in every community," Ku said.
The researchers said eliminating the subsidies would likely cause a ripple effect that starts with reduced affordability for patients. If insurers get lower or no subsidies, they may respond by cutting payments to providers. That in turn could drive lower employment for healthcare organizations, according to the report.
With those job losses and other financial strains, states may see additionally reduced funds given lowered consumer spending.
“The economic impact of millions of people losing their health insurance is deeply concerning," said Joseph R. Betancourt, M.D., president of the Commonwealth Fund, in the release. "Quite simply, an increase in the uninsured rate is going backwards and will not make America healthy again, as people will struggle to control their chronic illnesses, get the health care they need, and live healthy lives."