Despite dire predictions, ACA serves as economic stimulus

There is no evidence that the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) has had a negative impact on economic growth or jobs or that the ACA has undermined full-time employment, all effects that opponents of health reform warned about, according to a report by The Commonwealth Fund. Evidence actually indicates that the law has served as an economic stimulus by freeing up private and public resources for investment in jobs and production capacity.

Dire economic predictions

In 2010, when the ACA was enacted, policymakers were still dealing with the effects of the most severe recession since the Great Depression. Some worried that undertaking such a large-scale expansion of health insurance coverage, including the establishment of new requirements for health benefits provided by employers, would hinder job growth and economic recovery. However, The Commonwealth Fund report shows that since 2010, the U.S. economy has been growing slowly but steadily, with the gross domestic product (GDP) growing by 21 percent through 2015. Adjusted for inflation, gross private domestic investment through 2015 has grown faster than the GDP, paving the way for continued growth.

Job growth

The U.S. economy has gained nearly 14 million private sector jobs over five years, with full-time work accounting for all of the net gain. Currently, there are 5 million more people working now than during the peak level prior to the recession, and the unemployment rate has fallen. Jobs are growing faster than in any year since the 1990s. On a state and local level, job growth has improved state tax revenues.

Health care spending

Per-person private and public health care spending has slowed for the past five years. Reforms under the ACA related to Medicare have likely contributed to the slowdown in health care spending, thanks to the tightening of provider payment rates and the introduction of incentives to reduce unnecessary costs. The accrued savings in health care spending relative to pre-ACA projections of growth are substantial, and Medicare alone is projected to spend $1 trillion less between 2010 and 2020.

Looking forward

Without targeted efforts to sustain the growth of the past five years, market forces, such as rising drug costs and higher prices resulting from provider and insurer consolidation, have the potential to reduce positive trends. If such efforts are not made, the U.S. may find itself on a path where costs increase faster than the economy and people’s incomes, undermining the ACA’s goal of health care and insurance affordability.