January 3, 2017, by Erik Larson

The Economic Impact of Repealing the ACA

The American Hospital Association (AHA) and Federation of American Hospitals (FAH) teamed up to put the Trump administration on notice that the repeal of the Affordable Care Act (ACA) could cost the hospital industry $165 billion. In addition, payment cuts included in the ACA to help funding the cost increases, which are not reversed in the Trump proposal, would add another $102 billion to the price tag.

Losses of this magnitude cannot be sustained and will adversely impact patients’ access to care, decimate hospitals’ and health systems’ ability to provide services, weaken local economies that hospitals help sustain and grow, and result in massive job losses.
AHA President and CEO, Rick Pollack, and FAH President and CEO, Chip Kahn

The impact on the hospital industry as outlined in the economic analysis commissioned by the AHA and FAH would also result in massive job losses. In California alone these job losses could top 209,000.

3 Big Impacts of Repealing the ACA

If the ACA is repealed, as laid out in H.R. 3762, the result between 2018 and 2026 will result in three major economic impacts:

  1. The loss of coverage would have a net impact on hospitals of $165.8 billion with the restoration of Medicaid DSH reductions.

  2. The Medicare reductions provided in the ACA are maintained and hospitals will suffer additional losses of $289.5 billion due to lack of inflation updates.

  3. Full restoration of Medicare and Medicaid Disproportionate Share Hospital (DSH) payment reductions embedded in ACA would amount to an additional $102.9 billion loss.

3 Drivers of the Impact of ACA Repeal

  1. ACA policies that expand coverage are removed without offering a replacement.
  2. ACA taxes intended to help finance that coverage are removed.
  3. ACA reductions in hospital payments that were intended to finance that coverage except are maintained.

While the impact of repealing the ACA is a projection, based on assumptions, there is broad agreement that such a repeal will introduce tremendous uncertainty in the market, which is a threat to the current trend of growth in the market.

The Congressional Budget Office produced a report that generally concluded that federal deficits would increase by $137 billion over ten years:

For many reasons, the budgetary and economic effects of repealing the ACA could differ substantially in either direction ... However, CBO and JCT’s best estimate is that repealing the ACA would increase federal budget deficits by $137 billion over that 10-year period.”

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