How Would a Rollback of the Affordable Care Act Impact Iowa's Economy?

Affordable-Care-Act-Impact-on-Iowa-Economy.png

Originally published in the January 27, 2017 issue of the Business Record

By: Fred Abraham
Professor and Head of Economics, Head of Finance, Director of the Center for Economic Education

A rollback of the Affordable Care Act will have a negative impact on many Iowans but paradoxically little effect on the state‘s $175 billion economy. Further, it is unlikely the bill would be completely eliminated, at least not immediately. Allowing people under the age of 26 to stay on their parents' health insurance and the requirement that health insurers cannot refuse coverage to those with pre-existing conditions are extremely popular. 

What might be eliminated would be the employer mandate that requires larger employers to provide affordable care to their employees. Also, the individual mandate, which requires everyone to have health insurance or pay a tax penalty might be gone, and the subsidy making insurance available to lower income people could be eliminated. Medicare recipients will pay more and Medicaid benefits will be decreased.

This would cause a medical hardship for many people, even those with insurance. Further, some estimates put the number of Iowans who might completely lose insurance at about 150,000. That could put a strain on government and health care providers who could provide limited free care, but not a huge impact on the state economy. We would return to the pre-ACA time when people relied on charitable health care, government, or went without.

Dropping ACA will negatively affect a lot of people, but it is unclear who will benefit. For larger employers, part of health care cost is included in the calculation of overall compensation packages. As insurance costs rise, wages tend to be adjusted accordingly. Salary increases may not be as great, and other benefits may be reduced or even eliminated. So, after all adjustments, dropping ACA could result in higher health care costs for workers but also slightly higher wages. This will probably not help the low income or unemployed, and we could see a redistribution of income from them to higher income groups. A change in individual spending might result, but little modification in overall state spending.

While the gainers from repealing ACA are not clearly identified, the losers are. Health care for many will become more expensive or limited, and fewer people will have insurance. The bottom line is even though many thought ACA was a disaster for business, it was not. Repealing it will hurt many people, with almost no impact on the state‘s economy. The repeal of ACA will cause financial hardship for many to benefit an unknown few.

 

The views and opinions expressed are those of the author and do not imply endorsement by the University of Northern Iowa.

Posted on 22-Feb-17


  






UNIBusiness News

How Would a Rollback of the Affordable Care Act Impact Iowa's Economy?

Affordable-Care-Act-Impact-on-Iowa-Economy.png

Originally published in the January 27, 2017 issue of the Business Record

By: Fred Abraham
Professor and Head of Economics, Head of Finance, Director of the Center for Economic Education

A rollback of the Affordable Care Act will have a negative impact on many Iowans but paradoxically little effect on the state‘s $175 billion economy. Further, it is unlikely the bill would be completely eliminated, at least not immediately. Allowing people under the age of 26 to stay on their parents' health insurance and the requirement that health insurers cannot refuse coverage to those with pre-existing conditions are extremely popular. 

What might be eliminated would be the employer mandate that requires larger employers to provide affordable care to their employees. Also, the individual mandate, which requires everyone to have health insurance or pay a tax penalty might be gone, and the subsidy making insurance available to lower income people could be eliminated. Medicare recipients will pay more and Medicaid benefits will be decreased.

This would cause a medical hardship for many people, even those with insurance. Further, some estimates put the number of Iowans who might completely lose insurance at about 150,000. That could put a strain on government and health care providers who could provide limited free care, but not a huge impact on the state economy. We would return to the pre-ACA time when people relied on charitable health care, government, or went without.

Dropping ACA will negatively affect a lot of people, but it is unclear who will benefit. For larger employers, part of health care cost is included in the calculation of overall compensation packages. As insurance costs rise, wages tend to be adjusted accordingly. Salary increases may not be as great, and other benefits may be reduced or even eliminated. So, after all adjustments, dropping ACA could result in higher health care costs for workers but also slightly higher wages. This will probably not help the low income or unemployed, and we could see a redistribution of income from them to higher income groups. A change in individual spending might result, but little modification in overall state spending.

While the gainers from repealing ACA are not clearly identified, the losers are. Health care for many will become more expensive or limited, and fewer people will have insurance. The bottom line is even though many thought ACA was a disaster for business, it was not. Repealing it will hurt many people, with almost no impact on the state‘s economy. The repeal of ACA will cause financial hardship for many to benefit an unknown few.

 

The views and opinions expressed are those of the author and do not imply endorsement by the University of Northern Iowa.

Posted on 22-Feb-17







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