A study published by the Bay Area Council Economic Institute in San Francisco, CA, concludes that the Affordable Care Act will be a boon for California’s economy, creating almost 100,000 new jobs and boosting economic output by $4.4 billion statewide.

May 22, 2012

2 Min Read
Affordable Care Act Is Good for Business, Says California Council

A study published yesterday by the Bay Area Council Economic Institute in San Francisco, CA, concludes that the Affordable Care Act will be a boon for California’s economy . . . if the Supreme Court does not strike down the legislation. It will create almost 100,000 new jobs across California and boost economic output by $4.4 billion, according to the Economic Impact of the Affordable Care Act on California report, which was published on May 21, 2012. Southern California will reap the biggest job gains, with almost 58,000 new jobs.

The report posits that an overall rise in economic activity, driven by increased spending on healthcare and medical services, will lift other parts of the economy and stimulate employment. Net economic activity would increase by $3 billion in Southern California, again the greatest beneficiary in the state.

The figures take into account the dampening effect that provisions such as the employer mandate is expected to have on hiring and economic activity; however, the study maintains that the employer mandate is a "crucial tool" for the overall expansion of healthcare coverage, which is a net job creator in the state.

Moreover, expanding healthcare coverage will result in a healthier workforce and prevent workers from being sidelined because of health problems, says the study. Broader coverage also will reduce a disincentive among workers to seek other employment opportunities because they are worried about changing health insurance.

The device tax, which has been the subject of fierce debate within the medtech industry, only makes a cameo appearance in the study. “The tax on medical devices has the potential to influence the market," note the study authors. “As it is a 2.3% tax on sales of taxable medical devices, and not a lump sum, it will likely affect prices. However, given that the market for these devices is quite inelastic, this increase in prices is likely to be passed on to consumers through higher prices for insurance.”

The study is careful to note that "the ultimate impact of health care reform—both in terms of its true economic implications and whether it achieves its substantive policy goals—depends heavily on implementation, which will require close partnership between the federal government, the states, and the private, charitable, and non-profit sectors."

Read the full press release on Qmed.

Norbert Sparrow

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