NCPA - National Center for Policy Analysis

Repealing the ACA Would Bring Economic Growth

March 15, 2017

The recent CBO analysis of repealing the Affordable Care Act focused on the number of people who become "uninsured" because they would no longer be forced to purchase insurance.  What they didn't show, however, was how the Affordable Care Act has been a burden to job creation, GDP growth and personal income growth.  The NCPA's analysis finds that repealing the burdensome taxes that were imposed as a result of the ACA would improve the national economy.

In modeling the American Health Reform Act, David Tuerck, NCPA Senior Fellow and Executive Director of Beacon Hill Institute and his team estimated the effects on jobs and revenue using some core assumptions:

  • Eight ACA taxes would be repealed.
  • Exchange subsidies would end.  Under these subsidies, some 33 million full-time workers can qualify for exchange subsidies only by working part-time or reducing their incomes below 400 percent of the poverty level.
  • This creates an implicit "full-time employment tax" of 4.5% on payrolls.
  • The House plan tax credits impose an implicit 10% tax on the benefits received by eligible taxpayers.

 Thus the repeal of the ACA would have various positive economic effects:

  • Health care reform would increase real gross domestic product (GDP), relative to the current baseline, by 1.34 percent in 2018 and by 1.50 percent in 2027.
  • Private sector employment would exceed baseline by 745,000 jobs in 2018 and 940,000 jobs in 2027.
  • Personal income would increase $111 billion in 2018 and $185 billion in 2027.
  • Business investment would increase $22 billion in 2018 and $67 billion in 2027.

 Revenue effects:

  • However, federal revenues would fall $84 billion in 2018 and $1 trillion over a 10-year period (2018-2027) compared to baseline estimates.
  • State and local revenues would increase $26 billion in 2018 and $325 billion over a 10-year period (2018-2027) compared to baseline estimates.C

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