Medicaid and SNAP cuts could lead to 1.2M lost jobs by 2029, report finds
The Commonwealth Fund has released a report on the possible ramifications of cuts to Medicaid, Medicare and the food-assistance program, SNAP, warning that 1.2 million jobs could be lost by 2029 if a safety net spending reduction is passed, as proposed by Congress.
Working with George Washington University Milken Institute School of Public Health on the analysis, the research team attempted to quantify the impact a reduction in federal spending would have on state economies, especially in less-wealthy states that rely heavily on Medicaid and SNAP to supplement the basic needs of their populations.
They concluded that by 2029, cuts to Medicaid and SNAP would cause a drop in state GDPs that would outweigh the cost savings of a spending reduction. Specifically, the Commonwealth Fund projects that state economies would recede by $154 billion—dwarfing the $131 billion in savings the cuts to the programs would save the federal government.
The researchers believe the loss of revenue would come from a lower tax base, caused by a rise in unemployment.
“The cuts would result in the loss of 1.22 million jobs nationwide, equivalent to a 0.8-percentage-point increase in the unemployment rate,” the authors wrote in the report. “States with higher rates of poverty would likely be harmed more. State and local tax revenues would fall by $12 billion.”
“Additional fallout from budget cuts to the health insurance marketplaces and the sequestration of Medicare funding will further harm the economy and employment,” they added. The Commonwealth Fund has released a report on the possible ramifications of cuts to Medicaid, Medicare and the food-assistance program, SNAP, warning that 1.2 million jobs could be lost by 2029 if a safety net spending reduction is passed, as proposed by Congress.
Working with George Washington University Milken Institute School of Public Health on the analysis, the research team attempted to quantify the impact a reduction in federal spending would have on state economies, especially in less-wealthy states that rely heavily on Medicaid and SNAP to supplement the basic needs of their populations.
They concluded that by 2029, cuts to Medicaid and SNAP would cause a drop in state GDPs that would outweigh the cost savings of a spending reduction. Specifically, the Commonwealth Fund projects that state economies would recede by $154 billion—dwarfing the $131 billion in savings the cuts to the programs would save the federal government.
Unemployment to rise
The researchers believe the loss of revenue would come from a lower tax base, caused by a rise in unemployment.
“The cuts would result in the loss of 1.22 million jobs nationwide, equivalent to a 0.8-percentage-point increase in the unemployment rate,” the authors wrote in the report. “States with higher rates of poverty would likely be harmed more. State and local tax revenues would fall by $12 billion.”
“Additional fallout from budget cuts to the health insurance marketplaces and the sequestration of Medicare funding will further harm the economy and employment,” they added.
The group used the budget bill as it currently stands, passed through the U.S. House of Representatives and awaiting a vote in the Senate, as the basis for the report.
Per the analysis, states would be disproportionately impacted, with poorer states likely to see the largest number of jobs lost. Should this spending bill pass, Medicaid would be cut by more than 13% nationwide. But, funding to states is not equal, meaning a state like Arizona would lose 21%, while a state with a lower population would see cuts around 6%.
The Commonwealth Fund believes job loss would also be proportionate to cuts, with healthcare likely to see one of the largest erosion of workers.
“More than a million people will lose their jobs, particularly in the health care sector. Hospitals, clinics, and nursing homes will close, many of them in rural and low-income communities,” the report reads.
Communities will suffer in other ways, too—many of which, such as rising unemployment, could further increase the demand for healthcare services. The Commonwealth Fund said that, as states suffer, local governments will have to cut back services to compensate.
“The need to compensate for the loss of billions of dollars in federal funding will mean that state and local governments will have to consider cuts in other public services, such as education or infrastructure, just as they lose billions of dollars in state and local tax revenue because of the economic dislocation these policies cause,” the authors concluded.
The full report is available here.
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