ASU professor’s study finds Obamacare repeal could cause health care recession

Feb 9, 2017, 3:07 PM

(Photo: Johanna Huckeba/Cronkite News)...

(Photo: Johanna Huckeba/Cronkite News)

(Photo: Johanna Huckeba/Cronkite News)

PHOENIX – A new report from an Arizona State University professor predicts that repealing Obamacare could cut Arizona jobs and send the state into a “health care recession.”

Lee McPheters, a research professor of economics, discussed the findings of his January study in a conference call Wednesday.

Since 1995, one out of every five new payroll jobs came from the health care sector, according to the study. “It’s the only industry in Arizona to grow uninterrupted since 1965,” McPheters said.

If the federal government repeals the health care law, the study suggested it would cost nearly half of all of Arizona’s job losses in 2018.

President Donald Trump and Republican lawmakers have made repealing the Affordable Care Act a top priority. In January, Trump’s first executive order directed government agencies to scale back aspects of the health care law, according to The New York Times.

Without Obamacare, the study said Arizona will lose revenue from Medicaid expansion funds and insurance premium tax credits.

First, the health care sector will cut jobs and reduce salaries, the study said. Health care companies will limit purchases from suppliers and halt new construction. And when people don’t work, they don’t spend as much and contribute to the economy.

“Personal income in 2018 will be lower in Arizona by $3.5 billion,” McPheters said.

The study explored two scenarios with varying degrees of cuts to the health care program. In either case, health care job losses would account for 47 percent of all job losses in 2018.

However, many residents support a repeal. Sen. John McCain, R-Arizona, has called it an “unsustainable system that places an unfair financial burden on families and small businesses,” according to a previous Cronkite News article.

Criticism has been especially sharp in Arizona, where customers faced the steepest premium increases in the nation – 116 percent, according to estimates from Department of Health and Human Services – when this year’s open enrollment period began Nov. 1.

The Department of Health and Human Services reported that about 203,000 people in Arizona obtained coverage through one of the Affordable Care Act’s marketplace plans in 2016.

McPheters said Phoenix and Tucson would most likely have the biggest impact from the repeal, though smaller communities also will feel the impact.

Kimber Lanning, executive director of Arizona Rural Development Council, said the council has had hundreds of smaller companies express concerns over how cuts to the health care act will affect them.

“We’re concerned about care. If they have any of their services reduced, it can affect the well-being of the people they serve,” Lanning said. “Any threat to the sustainability of those communities … is very dangerous.”

Still, McPheters recognizes that other components of the economy will still grow, softening the overall impact of the cuts.

“We aren’t suggesting that the economy will go into some kind of death spin.”

Cronkite News reporter Allie Bice contributed to this article.

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ASU professor’s study finds Obamacare repeal could cause health care recession