The American Health Care Act (AHCA) drastically cuts spending on Medicaid and subsidies to help people purchase health insurance, while cutting taxes that disproportionately fall on higher-income households. Because low- and moderate-income households tend to spend a much higher share of their disposable income, the overall effect of the AHCA would be less spending and lower aggregate demand across every state and congressional district. All else being equal, this could potentially slow job growth by 1.8 million jobs in 2022, according to a new analysis from EPI Research Director Josh Bivens.
“There is some uncertainty because the AHCA’s big cuts don’t happen right away, but one thing is clear,” said Bivens. “The areas hardest-hit by the AHCA will see fewer jobs, period, and unless other macroeconomic policy works a lot harder we will see nationwide job loss.”
Key findings include:
- All-else-being-equal in the economy, the AHCA could potentially slow job growth by 409,000 jobs in 2020, 1.6 million in 2021, and 1.8 million in 2022.
- The 15 states with the largest reduction in job growth (as a share of the total employed population in 2015) are: New Mexico, Kentucky, Montana, Oregon, West Virginia, Rhode Island, Louisiana, New Jersey, Arizona, Washington, Colorado, Nevada, Vermont, Michigan and Ohio.
- The average potential drag on jobs in each congressional district as a result of the AHCA ranges from no effect to 20,000 jobs lost, averaging 4,000 fewer jobs in 2022.
- As a general rule, states and CDs with large Medicaid spending fare worst from AHCA repeal, while states with a high share of rich households do better. This is because the Medicaid cuts drag the most on growth, while the only countervailing stimulus provided by the AHCA is tax cuts that disproportionately boost the incomes for the richest households.