Nearly 1.5 million jobs — about 11,000 of them in South Carolina — would be lost by 2026 if the Obamacare repeal and replace bill under consideration by Congress passes, new research shows.
Most of those jobs will be in the health care sector — about three quarters of them at hospitals and clinics that serve as the safety net for low-income patients, said Leighton Ku, lead author of the report by researchers at George Washington University for The Commonwealth Fund.
And the offshoot could be the shuttering of rural hospitals, the curtailing of emergency and other high-cost services, and longer waits for everyone, he said.
The analysis is based on changes proposed in the bill to the federal Medicaid program — funds that are spent on health care that are in turn used by providers to pay staff and rent, and purchase equipment, goods and services, and money then spent by those employees and businesses on housing, food and other services in the community, according to the report. This is called the multiplier effect.
So the less spent on health care — a sector that has grown since the economic downturn — the less is spent in the community.
“It’s not just jobs that are lost,” Ku said. “South Carolina would have a $1 billion lower state economy by 2026. In the long run, it’s negative to the economy.”
In addition to the lost jobs and the $1.07 billion hit to the gross state product, South Carolina also would see a $1.6 billion loss to business output, the analysis shows.
Because the Senate bill, which is called the Better Care Reconciliation Act, would cut federal Medicaid funding by 26 percent in 2026 — and 35 percent by 2036 — every state but Hawaii would have fewer jobs and a weaker economy, with gross state products declining nationally by $162 billion and business output $265 billion lower in 2026, according to the research.
For North Carolina, it means a loss of thousands of jobs as well as $3.6 billion lost in gross state product and $5.9 billion lost in business output, the report shows.
"Although North Carolina has not expanded Medicaid," Ku said, "our study indicates that if the Senate bill was adopted, North Carolina would lose 36,000 jobs by 2026, including about 24,000 in health care and 12,000 in other areas."
Nationally, some 1.45 million jobs would be lost — 919,000 in health care and 534,000 in other sectors — from construction and real estate to finance and retail, the analysis shows. And the losses are worse than those predicted under the House bill, the American Health Care Act.
Replacing the ACA with either the House or Senate bill would be a disaster for the state’s economy, especially small businesses, said Frank Knapp, CEO of the South Carolina Small Business Chamber of Commerce.
“While most of these job losses would be in health care, these workers are all consumers that small businesses across the state rely on for demand for goods and services,” he said.
“Higher unemployment means less shopping on Main Street, fewer cars sold, reduced interest in new housing and so on," he added. "Our rural areas that are already struggling would be the hardest hit.”
Columbia health care consultant Lynn Bailey said health care makes up 23 percent of the state’s economic activity, about the same as its manufacturing sector.
And the decrease in health care spending forecast by the Commonwealth Fund analysis will ripple through the state’s economy, slowing growth and reducing tax revenues, she said.
“South Carolina’s economy is a complex set of inter-relationships and health care is part of this vital economic activity,” she said.
“It’s as if BMW or Volvo or Michelin closes down,” she said. “What would South Carolina do if any of these companies announced next week: ‘Sorry, South Carolina. We’re leaving in 4 years?’
“This isn’t good news.”
But Robert P. Hartwig, clinical associate professor of finance at the University of South Carolina, said Republicans claim that the money saved through their measure, by reducing taxes on businesses, for example, will go toward creating jobs elsewhere in the economy.
“If dollars are not spent in the health care sector,” he said, “they are spent someplace else.”
Impact on services
Ku said the job loss will be tantamount to increasing the national unemployment rate, currently at 4.4 percent, to just above 5 percent, with the changes concentrated in health care.
While the impact will vary, he said, facilities that deal with a lot of low-income and Medicaid patients will be hit hardest, such as safety net hospitals like Greenville Health System.
That could mean hospitals closing, cutting services, and not hiring as many health care providers leading to longer waits for everyone including those on private insurance, Ku said.
“Hospitals may close down specific things, for example, hospitals often lose money on emergency rooms,” he said. “In that case, everybody who would use that emergency room at that hospital loses some access.”
Regardless of what happens with any legislation, the health care industry is facing difficult financial times and GHS is working to be flexible enough to be successful in the future, said spokeswoman Sandy Dees, declining to address the job loss issue.
But South Carolina Hospital Association spokesman Schipp Ames said the BCRA will no doubt have a negative impact on the industry.
“It comes as no surprise that the proposal projected to reduce health coverage by 22 million Americans and reduce Medicaid spending by $772 billion would have a negative economic impact on the health care industry,” he said. “Hospitals are economic engines, and for many communities, they are the largest employer and provider of capital investment for their local economies.”
Hartwig said hospitals are already consolidating as they seek to achieve economies of scale in a changing landscape and that’s likely to continue. While that could mean people will have to travel farther to get care, he said, technology will eventually reduce the need for as many office or hospital visits — through telemedicine, for example — which will offset the loss of health care jobs.
Repeal and replace
Under the Affordable Care Act, or Obamacare, some 20 million people nationwide — about 200,000 of them in South Carolina — got coverage either through the federal health care marketplace or the expansion of Medicaid.
And the Congressional Budget Office estimates the BCRA will result in 22 million Americans losing their insurance coverage by 2026.
That includes 215,000 in South Carolina and 553,000 in North Carolina, according to the Commonwealth Fund.
When tax revenues drop as they do when people lose their jobs, that leads to other problems, such as an inability to pay for the increasing social needs of the uninsured and unemployed, Ku said.
U.S. Sen. Lindsey Graham’s spokesman Kevin Bishop dismissed the study, saying, “It shouldn’t come as a surprise that an organization which played a supporting role in bringing Obamacare to life is opposed to repealing and replacing Obamacare.”
The Commonwealth Fund said it doesn’t take positions on legislation, but analyzes the effects of bills like the ACA and how well they align with the organization’s goals of promoting affordable quality health care for all Americans.
Graham on Thursday proposed his own alternative to Obamacare which redirects $110 billion in federal funding to the states to pay for health care coverage as they see fit.
U.S. Sen. Tim Scott and Rep. Trey Gowdy declined comment because the bill is in flux, while Rep. Jeff Duncan could not be reached for comment.
But U.S. Rep Jim Clyburn said that whether it involves jobs, coverage or patient protections, “Trumpcare would be a disaster” for South Carolina and the entire country.
“Congress must reject the current Senate bill immediately,” he said, “and get to work on bi-partisan legislation to repair the Affordable Care Act and restore stability to the insurance markets.”
Hartwig said that health care represents more than 18 percent of the gross domestic product now, without better outcomes than countries that spend far less.
“Are we spending our health care dollars efficiently?” he asked. “The answer is no.”
There’s no question the health-care system, including Medicaid, needs to be reformed, he said. The question is whether or not the BCRA is the best way to do it.
Hartwig said it’s difficult to say where the debate will wind up. The ACA may remain the law of the land indefinitely or large portions of it may be refined, which will require Republicans to work with Democrats, he said.
So will a repeal and replace measure pass?
That, says Ku, is the several hundred billion dollar question.