Noem/Trump Care Gives Economic Head Fake, Then Kills SD Jobs & GDP

Last month I mentioned that, along with everything else wrong with the Trump/GOP health care plan, Rep. Kristi Noem was voting to kill jobs:

…taking health benefits away from millions of working-class Americans and booting the savings up the ladder to rich people means less consumer spending and slower job growth. So Kristi’s screwing not only millions of Americans but her own chances of achieving her ridiculous 9.1% economic growth goal [CAH, “Noem: Less Health Care, More Job-Killing Tax Cuts for the Rich!” Dakota Free Press, 2017.05.05].

Confirming that Noem/TrumpCare would be bad for the economy is a new analysis by George Washington University (funded by the Commonwealth Fund) that predicts short-term gains swamped by long-term losses:

The American Health Care Act… would raise employment and economic activity at first, but lower them in the long run. It initially raises the federal deficit when taxes are repealed, leading to 864,000 more jobs in 2018. In later years, reductions in support for health insurance cause negative economic effects. By 2026, 924,000 jobs would be lost, gross state products would be $93 billion lower, and business output would be $148 billion less. About three-quarters of jobs lost (725,000) would be in the health care sector. States which expanded Medicaid would experience faster and deeper economic losses [L. Ku, E. Steinmetz, E. Brantley et al., The American Health Care Act: Economic and Employment Consequences for States, The Commonwealth Fund, June 2017].

In South Dakota, the first year of the AHCA would give us 2,700 new jobs, $300 million more in gross state product, and $500 million more in business output. But by 2026, AHCA would leave us worse off than under the Affordable Care Act, with 2,600 fewer jobs (2,000 of them lost in health care), $300 million less in gross state product, and $500 million less in business output.

Why gains up front but losses twice as big later? Because Noem/TrumpCare gives tax cuts to the rich immediately and cuts health care for everyone else over time, and we get more stimulatory bang for the buck from health care than from billionaire tax breaks:

Both government spending increases and tax reductions can stimulate job creation and economic growth. The relative effects depend on how the funds are used. Government spending or transfers, like health insurance subsidies, typically have stronger multiplier effects in stimulating consumption and economic growth than do tax cuts. Tax cuts usually aid people with high incomes who shift much of their gains into savings, stimulating less economic activity.^5,6,7 A recent analysis found that 90 percent of the AHCA’s tax cuts go to the top one-fifth of the population by income⁸ [Ku et al., June 2017].

Kristi Noem’s vote for the AHCA would produce some temporary economic gains, just in time for her election bid for Governor. But if she won, once she took office, we’d all see the net negatives of her mean health care vote.