Affordable Care Act may harm Spokane’s economy

There is an assumption that the Affordable Care Act (ObamaCare[1]) will lead to an increase in health care usage and this will be a boost to Spokane’s economy, which has a large health care segment.

Based on recent news reports, ObamaCare might be an economic mess for Spokane as there are forecasts that low wage jobs will see loss of employer provided health care benefits. That does mean this will happen for sure – it is just one hypothesis that some have proposed. Read the full set of headlines, below (and click through to read the original articles). Updates are added at the top of the list as recent news seems to confirm this trend.

Updates December 2013:

Updates April 24 2013:

Since this was originally written:

Updates Feb 5-9 2013:

Original Items

How might this impact Spokane? Read more after the break…
Spokane has three industrial sectors:
  1. Health care
  2. Government
  3. Retail and #4 restaurants and lodging

Here’s an old chart from a year ago, flipped and turned vertical so that it is easier to gauge the relative sector sizes.

The total of #3 and #4 is larger than either government or health care and accounts for 1 in 5 workers. This sector is primarily low wage, low skilled workers – where hiring another part time worker is easy.
CNBC report: “restaurants and hotels are among the industries likely to be squeezed the hardest by the law because they are low-wage industries that do not offer coverage to most of their workers.”
Even health care is not immune  – many low paid, lower skilled jobs such as Nursing Assistant-Certified (NACs) may see their hours cut so that providers can reduce ObamaCare costs.
  • If the trends outlined in news reports above spread, many Spokane workers maysee their hours cut or their jobs eliminated.
  • Simultaneously, many will be forced (by law) into purchasing more comprehensive health insurance on their own (some will see subsidies but these will not be as large as many expect).
  • As more household spending is mandated to be spent on health insurance, less money will be spent at local retail (in 2012, taxable retails sales per household in Spokane are -20% less than in 2007 and presently less than in 2004).
  • Many “part timed” workers may not be able to find a 2nd part time job for reasons explained here – work in the restaurant and lodging industry may be limited to the busiest hours of need when you’ll already be working the 1st part time job.
  • Local wage base would then shrink further. The Congressional Budget Office forecast a 1/2% reduction in the workforce due to the ACA.

The Affordable Care Act could be yet another blow for Spokane’s economic engine – and not the savior of the local economy as local cheerleaders portray it.

The rich in Spokane (health care providers) will get richer while many of Spokane’s residents may be worse off. Government workers will rest comfortably with rich benefits and pension programs that are non existent in the private sector.

Based on the recently published indicators, Spokane’s economy may be in for a hell of a ride – downhill – for another several years.

Footnote [1]:
The term ObamaCare was first used by Hilary Clinton’s presidential campaign in 2008 in response to her proposal having been called “HilaryCare”.
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