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The fight over Obamacare is hurting health care job growth

Christopher Furlong/Getty Images

The latest effort to replace Obamacare has serious consequences for millions of Americans who rely on government subsidized health care. But it has also cast uncertainty on hiring in the health care industry, which has been a driving force in the country’s economic recovery and growth.

Since the start of the recession, the health care industry has created 2.5 million new jobs in hospitals, nursing homes, and doctor’s offices. Aging baby boomers and the growing number of senior citizens who need health services has led to higher demand for health care workers. The passage of the Affordable Care Act in 2010, which required all Americans to purchase health insurance and expanded federal subsidies, also encouraged hiring.

The latest jobs report, released Friday, shows just how much the health care sector continues to fuel job growth. The US economy added 211,000 jobs in April, according to the estimates released Friday by the Bureau of Labor Statistics. That’s more than double the number for March, which was unusually low. Aside from leisure and hospitality jobs, some of the largest job gains came from hiring in the health care sector, which added 20,000 jobs. Nurses, physicians, and home health aides were among the most in-demand positions.

Chart showing monthly job creation in health care jobs since 2007.

While the number of new health care jobs continues to grow, hiring has slowed in recent months. In 2016, the industry creating an average of 32,000 new jobs each month. In 2017, that has dropped to about 19,000. The cause of the slowdown is unclear, though the uncertain future of Obamacare has put the health care industry on edge.

“It makes employers think twice about hiring,” says Vivian Ho, a health economist at Rice University. She believes the uncertainty is the biggest factor slowing down job growth in the industry, though rising out-of-pocket costs for workers with employer-sponsored health insurance could also play a role.

When patients can pay, hospitals can hire

For hospitals, the number one concern about the Republican health bill, known as the American Health Care Act, is that it will scale back expansion of Medicaid coverage. That’s a huge source of income for health care providers, says Beth Feldpush, senior vice president of policy and advocacy at America’s Essential Hospitals, which represents 300 hospitals across the country.

“Hospitals are very concerned that [the new health care bill] will have a huge financial impact,” says Feldpush, adding that it has led hospitals to put off hiring and expansion plans. “The largest cost for a hospital is employees and staff, so this is often where they start looking at ways to cut back.”

Obamacare subsidized insurance coverage for millions of Americans, turning many more uninsured patients into paying customers. This allowed hospitals to hire more nurses, doctors, and technicians. Uninsured patients had been costing hospitals a lot of money, as emergency rooms are not allowed, by law, to turn away people who can’t pay.

Research suggests the ACA led directly to 240,000 new health care jobs in 2014 and 2015, says Ani Turner, a health economist at the Altarum Institute, a nonprofit health systems research center based in Michigan. That was a third of the sector’s job growth during that time.

The recent industry hiring slowdown is probably a mix of two factors, Turner says: the Obamacare boom has petered out, and uncertainty has risen about the future of health care funding under Republican efforts to replace the law.

“Everyone is wondering if people are going to be covered, and what are the provisions for uncompensated care?” she says. “There is a lot at stake for them.”

The uneasiness has also extended to the health insurance industry, with companies announcing plans to pull out of insurance exchanges in certain states. They’ve complained that Obamacare has raised their costs too much by not letting them increase premiums on people with preexisting conditions, and that not enough young, healthy people are signing up to even out the burden.

It also didn’t help that the Trump administration has signaled that it will take a lax approach to enforcing the individual mandate.

Since April, three health insurers have announced plans to pull out of Iowa in 2018, which could leave more than 70,000 people in the state without coverage, according to USA Today.

The cost of the American Health Care Act is still unknown

The AHCA, which passed the House on the Thursday, would scale back many government subsidies for the poorest and sickest patients. House Republicans voted on it without waiting for an in-depth analysis of its most recent amendments by the Congressional Budget Office. However, a CBO analysis of an earlier version of the bill estimates that 14 million people could lose their health insurance by 2018 as a result.

It’s not easy to guess how many health care jobs would be lost under the bill. But health policy researchers at George Washington University believe 1.5 million jobs across the country could disappear just from ending the Obamacare Medicaid expansion, as the AHCA would eventually do. Researchers believe that most jobs would be in the health care industry, though not all.

Funding cuts would first affect organizations and their workers, but would then “ripple out” to other businesses and workers in several sectors. Health care providers will probably hire fewer workers, lower salaries, and reduce their purchases of goods and services. In turn, workers have less to spend on housing, food, and transportation, while downstream businesses are also forced to cut back. Researchers at George Washington University expect the law to have “widespread repercussions” on the US job market.

Unsurprisingly, states with a large health care workforce — like California and Florida — are at risk of losing the most jobs from the changes.