U.S. Secretary of Commerce Gary Locke argues that repealing the Affordable Care Act, the nation's new health-care law, will hurt families and American business competitiveness.
WHEN Republicans vote next week to repeal the Affordable Care Act, they are voting to repeal a new level of control that American families have over their health-care decisions.
They are also voting to make American businesses less competitive in the global economy.
Because just 10 months after its passage, the act has brought badly needed change to the American health-care system. The law:
• Prevents children with pre-existing conditions from being denied coverage;
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• Eliminates lifetime caps on the dollar amount insurance companies will spend on enrollees’ benefits, like cancer treatment;
• Allows children to stay on their parents’ insurance plans until they are 26;
• Gives tax credits to small businesses to help them afford health care for their employees; and
• Takes meaningful steps to lower costs and improve the quality of health care for all Americans
But from my perspective as U.S. commerce secretary, one of the most important benefits of the law is that it will make American businesses more competitive by reining in rapidly increasing health-care costs.
As President Obama has noted: “We are in a fierce competition among nations for the jobs and industries of the future.”
The Affordable Care Act will allow American businesses, large and small, to improve their performance against foreign competitors, most of whom have significantly lower health-care costs.
The cost savings are real, and they will grow over time.
It’s helpful to remember our health-care-cost trajectory before reform was passed. In the past 50 years, American firms saw a more than eightfold increase in the amount of payroll that went toward employee health insurance.
Rising costs have meant fewer jobs. A 2009 Rand study confirmed that over the past 25 years, many American employers were losing jobs and revenue as a result of onerous health-care costs.
Without reform, the impact of rising health-care costs on small businesses would be especially harmful.
Massachusetts Institute of Technology economist Jonathan Gruber estimates small businesses would fork over nearly $2.4 trillion in health-care costs over the next 10 years without reform — which would result in the loss of $52.1 billion in small-business profits, $834 million in wages and 178,000 small-business jobs.
Repeal would also mean the $40 billion worth of tax credits that up to 4 million small businesses would receive to defray employee health-care costs would disappear. A new Small Business Majority survey found that one-third of employers who don’t offer health insurance now would be more likely to do so because of these credits.
The law will also turn around health-care-cost trends and make U.S. businesses more competitive. The Business Roundtable estimates the cost saving measures in the law — ranging from incentives to reward doctors for the quality instead of the volume of care to a new independent advisory board to keep Medicare costs in check — will save large employers as much as $3,000 per employee in health-care costs.
As for the law’s budgetary impact, the nonpartisan Congressional Budget Office recently confirmed that repealing the law would increase the deficit by $230 billion in the first decade and by more than $1 trillion in the following decade.
So let’s cut to the chase. If Republicans succeed in repealing or chipping away at the law, it’s not going to get replaced with something better. It will be replaced by the same system that was breaking the backs of American families, businesses and government.
Complete or partial repeal will also create new uncertainties for companies and Americans just now emerging from uncertain economic times. According to Harvard Economist David Cutler, repealing the law would prevent 250,000 to 400,000 jobs from being created annually over the next decade.
In short, repealing the law is the wrong choice for American businesses and the American economy. That’s not to say that the new health-care law is perfect. But it is unquestionably moving us toward a more affordable and more effective health-care system. And that will move America ahead in the global race to develop new industries and create new jobs. It’s a race we can’t afford to lose.
Gary Locke, Washington state’s former governor, is the U.S. secretary of commerce.