Market Update: OpEd: Health Care Keeps Our Economy Alive – Full Analysis

Over the past 15 years, California has built one of the most robust health systems in the nation and in the process, it has strengthened the stability of the state and local economies.

By 2022, nearly 94% of Californians had health coverage. That progress is now at serious risk. Federal policy changes, state budget pressures and rising health care costs have created a perfect storm, one that threatens not only access to care but also the economic vitality of regions like Los Angeles that depend on a healthy workforce and stable safety-net infrastructure.

At a time when inflation continues to strain household budgets and small businesses are navigating uncertainty, health coverage disruptions will reverberate far beyond doctors’ offices and hospitals. Health care is inextricably tied to labor force participation, productivity and the ability of businesses to grow. When coverage wanes, the effects are felt in every corner of the economy.

California is approaching one of the most significant disruptions to health coverage in more than a decade, and the economic implications for our state and region cannot be overstated. With federal premium subsidies set to expire and changes to Medi-Cal eligibility taking effect, millions of Californians could soon face steep premium increases, in some cases nearly double what they pay today. An estimated 3.4 million Californians are likely to lose coverage altogether.

These projected losses are not abstract statistics. They represent working families and businesses that rely on affordable coverage to stay healthy and financially secure. For small businesses, especially sole proprietors already facing high costs and tight margins, even a small increase can put their health coverage out of reach. Losing access to care does not reduce the need for care; it simply delays it, ultimately driving up costs for taxpayers and the entire health care system.

Small businesses make up the backbone of the Los Angeles economy, employing millions of workers across industries from construction and retail to creative services and hospitality. When owners and employees lose coverage, absenteeism increases, productivity drops and turnover rises. These impacts slow economic growth at precisely the moment when the region needs resilience and stability.

This is not just a health policy problem. It is an economic stability problem. Coverage losses strain hospitals, employers, counties and partners across the system. They push more people into emergency departments for conditions that could have been managed with primary and preventative care. The Milken Institute estimates chronic diseases cost California more than $300 billion in lost economic output each year. Without consistent coverage, those costs will only rise. The burden often falls hardest on communities with the fewest resources and on the small and midsize businesses that form the backbone of the Los Angeles area economy.

What is often overlooked is that health care access is a major economic driver. Health care organizations are not only essential safety-net providers, but they are also significant employers and regional anchors. For example, the largest Federally Qualified Health Center in the country is right here in Los Angeles. AltaMed serves 700,000 patients and supports over 10,000 regional jobs, including at small businesses. A recent economic impact report found that AltaMed alone generated a $15.1 billion impact from 2019 through 2024 and produced $1.50 in economic activity for every dollar spent. They train local workers and provide the stability that businesses need to grow. If California’s health care system is weakened, the economic impacts will be felt across every sector. Reduced coverage means less preventive care, more emergency room use, higher long-term costs, and reduced productivity for employers who depend on a healthy workforce.

Community health centers like AltaMed do far more than deliver medical services. They invest in workforce development, partner with local vendors and act as anchors in neighborhoods that have historically been underserved. When these institutions are destabilized by coverage losses and funding cuts, the economic consequences extend to construction firms, technology providers, restaurants and countless other small businesses that are supported through their operations and employee spending.

The governor and legislature will confront difficult choices in the months ahead. As they do, it is essential to recognize that protecting coverage is not only the right thing to do for Californians, but also a sound economic strategy. A strong, stable health care system allows businesses to thrive, workers to stay healthy and productive, and local economies to grow.

Investments in health coverage consistently deliver returns through lower long-term costs, a more reliable workforce and stronger local economies. Conversely, short-term cuts that lead to coverage losses often create larger fiscal liabilities down the road, as untreated conditions become more expensive and disruptive.

California has long led the nation in expanding access to care because we understand that health coverage contributes directly to economic strength. Pulling back now would deepen the pressures facing communities and businesses across Los Angeles. The choices we make today will determine whether California moves forward with stability and resilience or risks avoidable setbacks felt for years to come.

At this critical moment, policymakers should view health coverage not as a line item to be trimmed, but as critical infrastructure, just as essential as roads, ports, and power grids. Protecting and strengthening coverage will help ensure that California’s economy remains competitive, inclusive and prepared for the challenges ahead. The stakes could not be higher, and the cost of inaction will be paid not only in Californians’ health outcomes, but in lost economic opportunity for the entire state.

Maria Salinas is the president and chief executive of the Los Angeles Area Chamber of Commerce.