New Studies: Proposed Health Cuts Would Significantly Harm California's Economic Health

• Study Reveals Over $2 Billion in Lost Business Activity, Shows County Breakdown of Lost Federal Matching Funds, Lost Wages, and Lost Jobs As Result of Budget Cuts

• Study Shows $290 Increase in Private Insurance Premiums Due to Health Cuts

By Anthony Wright
Executive Director of Health Access California

As California lawmakers debate budget cuts, taxes, and the economy, and on the day the California Employment Development Department released jobless statistics showing unemployment rates reaching 7.3%, with 15,000 Californians losing their jobs in July alone, two new reports exhaustively detail the significant economic impact of proposed health care cuts.

One report utilizes standard economic tools to show the significant economic impacts of the proposed health services budget cuts, of jobs, lost wages, and lost business activity. Another report includes new data by researcher Peter Harbage that shows that costs for insured families will rise due the need to make up for the lost revenue in the health care system as a whole.

Significant Side Effects: The Economic Impacts of Health Care Cuts in California Communities, by Hanh Kim Quach and Anthony Wright

Adverse Reaction: Proposed Health Budget Cuts Would Lead toIncreased Health Insurance Premiums, Harbage Consulting LLC

New unemployment statistics released today -- showing the state's jobless rate reaching its worst level in more than a decade -- depict an ailing California economy which will only become sicker if proposed health care cuts are enacted.

Health Access' research shows $2 Billion in lost business activity and 16,500 jobs lost as a result of budget cuts -- three times the economic impact of an upper-income tax increase -- and families facing a $290 increase in private insurance premiums to make up for the lost revenue in the health care system.

If policymakers are concerned about California's economy, the worst thing they can do is to approve these health care cuts. These cuts force us to lose hundreds of millions of dollars in federal matching funds-which then has ripple effects throughout the economy, impacting jobs, wages, and even health insurance costs.

Key findings of the report include:

• More Than a $2.1 Billion Economic Loss Statewide in the First Year, including 16,500 Lost Jobs: By cutting nearly over $800 million billion in health care spending, California will lose its dollar-to dollar federal matching funds. The loss of these dollars in circulation had additional economic consequences of more than $2 billion, in lost commerce, lost wages and lost jobs.

• Severe Reverberations in Both Urban & Rural Counties: Fifteen counties in California are expected to see losses in economic activity in excess of $30 million. Areas severely impacted by the proposed cuts include the Central Valley, with Kern, Fresno, and San Joaquin counties losing an estimated total of $183 million in business activity and $64.8 million in wages.

• Increased Health insurance Premiums Rise by $290: The budget cuts propose to deny coverage to around one million more Californians, leading to a cost shift from medical providers will end up treating more patients who cannot pay for services. A separate report quantifies the amount of that estimated premium increase.

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