A new study by the Bay Area Council Economic Institute suggests that if the Supreme Court strikes down the Affordable Care Act, it may have a negative impact on the California economy.
The study, The Economic Impact of the Affordable Care Act on California. concludes that the federal health care law would create almost 100,000 new jobs across California and boost economic output by $4.4 billion. The biggest expected job gains occur in Southern California, with almost 58,000 new jobs, followed by the Sacramento Valley with almost 13,500 new jobs, the Bay Area with 7,600 jobs, San Diego County with almost 6,500 jobs and the remaining 10,000 jobs spread throughout other counties.
“In the debate over the federal health care law, this study shows there has been more heat than light when it comes to understanding economic and jobs impacts,” said Jon Haveman, study co-author and chief economist for the Bay Area Council Economic Institute, the research arm of the Bay Area Council. “By focusing on expanding health insurance coverage, making our health care system more efficient and making our workforce healthier, we can realize important employment and economic gains.”
Download the full report: The Economic Impact of the Affordable Care Act on California.
Driving the employment gains is an overall rise in economic activity stemming from increased spending on healthcare and medical services and the secondary benefits of that money flowing to other parts of the economy. That increased spending will boost overall economic activity in the state by $4.4 billion. Again, the biggest gains will be in Southern California, where net economic activity increases by $3 billion. Sacramento County is the next largest beneficiary of increased spending, with net economic output rising by almost $608 million.
Those figures take into account the dampening impact that provisions such as the employer mandate is expected to have on hiring and economic activity. The mandate, which is among the more hotly contested elements of the Affordable Care Act, requires large employers to provide their employees with health insurance or pay a fine. And yet, the study observes that the employer mandate is a “crucial tool” for the overall expansion of healthcare coverage that on net is a job creator in the state.
“The Bay Area Council’s new economic impact report shows that making the insurance market fairer and more inclusive is an economic boon to the state,” said Julian Canete, President & CEO of the California Hispanic Chambers of Commerce (CAHCC). “The report demonstrates how the federal health care law will help communities such as California’s Latino-owned businesses and workforce by enhancing economic and health conditions to strengthen California’s economy.”
By expanding health care coverage, the study found, the Affordable Care Act will also expand the overall labor force by better maintaining the health of the workforce and preventing workers from being sidelined because of health problems. Broader coverage will also reduce “job lock,” in which uncertainty about changing health insurance discourages workers from seeking better jobs.
“The Affordable Care Act provides an important framework for expanding health care coverage in a way that can boost employment, increase overall economic activity and make people healthier,” said Dr. Micah Weinberg, study co-author and Senior Policy Advisor for the Bay Area Council.
The study is careful to note that “the ultimate impact of health care reform, though–both in terms of its true economic implications and whether it achieves its substantive policy goals–depends heavily on implementation, which will require close partnership between the federal government, the states, and the private, charitable, and non-profit sectors.”
“The Bay Area Council is playing a leadership role in the business community in working closely with state officials and other key policy makers in implementing the Affordable Care Act in California, keeping the focus on reducing health care costs and improving public health. These are the things that will help improve California’s business climate and keep us competitive in the global marketplace,” said Jim Wunderman, President and CEO of the Bay Area Council.