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Study: Job Losses In The Central Valley From ACA Repeal Could Be Worse Than The Drought

Feb 1, 2017

Politicians in California and Washington D.C. are busy trying to figure out the future of the Affordable Care Act, also known as Obamacare. Should it be fully repealed? What will the replacement be? Should there be a replacement at all? While the potential replacement is still a mystery, two researchers at the UC Berkeley Center for Labor Research and Education took a look at the potential impact of full repeal on the San Joaquin valley’s job market. They claim job losses from a repeal of the law would be worse than job losses caused by the drought. Valley Public Radio’s Jeffrey Hess spoke with report co-author Laurel Lucia about how she reached that conclusion. 

What exactly is your study about?

Jobs and the Affordable Care Act were both big issues in the election. Our research shows how interconnected they are. We estimate that the San Joaquin Valley would lose 24,000 jobs if the ACA is repealed and not replaced. That’s more jobs than were lost in the entire state in 2015 due to the drought. 

How do you reach that conclusion?

Well, what we did is we modeled the loss in federal revenue that would come to California under the Affordable Care Act. So, California would lose more than $20-billion in federal health care spending and that spending is used to support health insurance for Californians. When Californians have health insurance, they use more care, and therefore, hospitals and clinics and other providers staffed up in response to the Affordable Care Act and the increased demand for health care services. If the affordable care act was repealed, many of those jobs would go away. And when health care workers lose their income, they spend less money in their local communities at restaurants, at grocery stores, at retail stores, and other local businesses, so there would be a ripple effect of job loss throughout the economy. 

For a non-labor economist, can you explain the connection between spending and job creation, and how that would work in reverse if the spending went away?

Under the Affordable Care Act, millions of Californians gained health insurance coverage and research shows that when people have health insurance, they use more services. They especially increase their use of preventative services, mental health services, they get more care for their chronic conditions. In response to the increased use of care, hospitals and clinics and other providers have hired more staff to provide care to these patients and if the affordable care act is repealed, many of those jobs would go away. 

Republicans would tell you that they’re going to replace the Affordable Care Act, or that the state of California might step into the gap of what the federal funding shortfall is for the Democrats in Sacramento. So, is your report a little bit premature?

Well, there’s no guarantee that the Republicans will come to consensus on a replacement plan and that they’ll get the Democratic votes they need to pass it. They’ve had six years of debating the Affordable Care Act and haven’t come to agreement on a plan yet. If they do come to agreement on a plan and it passes, that could reduce the job loss to some extent, but the extent to which it would, would depend on the details of the plan. And in terms of California filling in some of these gaps, California would lose over $20 billion in federal funding if the ACA is repealed and that’s a huge share of the state budget. It would be very difficult for the state to make up all of that lost federal revenue.