Claim: Obamacare Repeal Could Hurt California

The Milken Institute School of Public Health at George Washington University has estimated that from a public sector viewpoint, repealing Obamacare would cost the State of California $20.7 billion in federal funding and eliminate 334,000 jobs.

The new MISPH report, sponsored by the Commonwealth Fund, analyzed what the impact would be of eliminating and not replacing the Patient Protection and Affordable Care Act, known as “Obamacare.”

The report projects that President-elect Donald Trump and Republicans are likely to submit a repeal bill similar to H.R. 3762,  which was passed by Congress in 2015, but was vetoed by President Obama. The legislation would have eliminated “two key elements of the health reform law: the insurance premium tax credits and the expansion of Medicaid eligibility,” beginning in 2018.

MISPH estimates that dumping Obamacare would result in an annual federal funding loss of $140 billion, and the loss of about 2.6 million jobs, because “[s]tates and health care providers will be particularly hard hit by the funding cuts.”

As the biggest beneficiary of Obamacare, California would therefore lose $20.7 billion in annual federal funding, and would suffer massive job losses. Job cuts by sector would include 121,300 healthcare workers; 35,200 construction/real estate jobs; 34,600 retail trade jobs; 16,400 finance/insurance jobs; 118,600 other private sector jobs; and 7,500 public sector jobs.

But MISPH fails to give any value to the positive “economic multipliers” from ending Obamacare. Even the wildly-liberal ‘UC Berkeley Labor Center’ acknowledges that the repeal of Obamacare would result in annual benefits to California from a $6.3 billion federal tax cut and “nearly $1.3 billion in eliminated penalties for uninsured individuals and employers not offering affordable coverage.”

Obamacare was sold to the American public as an economic stimulus. But pushing federal spending as a percentage of America’s GDP from 17 percent, to the record peacetime level of 22 percent, appears to have caused negative “economic multipliers” that resulted in the worst economic recovery since World War II.

Economists use a “Rahn Curve” analysis to understand how too much government spending actually has unintended negative impacts to the economy. The Heritage Foundation compiled the following list of how federal spending hurt the economy:

  • The “extraction cost” to the economy from government taxing and borrowing:
  • The “displacement cost” from government crowding out private-sector activities;
  • The “behavioral subsidy cost” from government encouraging destructive choices;
  • The “behavioral penalty cost” from government discouraging productive choices;
  • The “market distortion cost” on resource allocation;
  • The “inefficiency cost” from government delivering less efficient services; and
  • The “stagnation cost” of government perpetuating failing activities.

Barack Obama promised that because tax cuts have a smaller affect on aggregate demand than increased government spending, stimulus from his American Recovery and Reinvestment Act of 2009 and Obamacare spending would create 4 percent compounded GDP growth and shrink the U.S. deficit.

After eight years of the Obama administration, the U.S. only achieved 2 percent average GDP growth, and the federal deficit will soon have more than doubled to $20 trillion.


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