Medicaid Expansion created new jobs, boosted economy by $3.5 billion

Author: Dr. Rebekah Gee, Secretary, Louisiana Department of Health

When this administration took office, Gov. John Bel Edwards took the immediate step to sign an executive order to make Medicaid coverage available to low-income, working adults. The goal was to ensure that more people had coverage for primary and preventive health care, hospitalizations, mental health care services and substance abuse treatment. The goal was to take the first and most important step to make our residents healthier. It was the right thing to do.

My agency was charged with making this a reality, and in six months – June 1, 2016 – we began enrolling people into what we called Medicaid expansion.

As I promoted expansion during those six months, I talked about the benefits of coverage. I also discussed two other important benefits: expansion would save the state money, and expansion would boost the economy.

In addition to providing 471,000 residents with health care coverage, many for the very first time, we have fulfilled these two other promises about job creation and have witnesses a huge boost to the Louisiana economy.

This week, Gov. Edwards and I released a report from Dr. Jim Richardson of the Public Administration Institute at Louisiana State University (LSU) that highlighted the economic impact of Medicaid expansion.

The report, the first year that it has been released, shows that Medicaid expansion has leveraged the infusion of $1.85 billion in federal funds – new funding from the federal government that support the Medicaid program – into more than a $3.5 billion boost to the Louisiana economy. This would not have occurred if the state had not accepted Medicaid expansion.

Here are other findings from Dr. Richardson and his LSU team’s report:

• ·        More than 19,000 jobs were created or retained. These new jobs are in our hospitals, in our community clinics, in our managed care organizations and in other health care professions.
• ·        $3.48 billion in added business activity.
• ·        Local governments have seen a boost in new tax dollars of $74.6 million.
• ·        $103.2 million in state tax dollars have entered the economy.

Prior to expanding Medicaid, the state of Louisiana was spending approximately 40 cents on the dollar for uninsured care.  However, under expansion, the state of Louisiana will never spend more than 10 cents on the dollar. This difference is financing is one reason we are able to save money even while covering more people.

In the report, Dr. Richardson said this team focused their analysis on net new dollars that would not have been spent in Louisiana were it not for Medicaid Expansion. His team also looked at the experience in other states that expanded Medicaid as they conducted their analysis. They found:

• ·        Michigan: Expansion boosted that state’s economy and budget. A study done in January 2017 projected that in 2020 state will still generate additional tax receipts that are larger than state’s share of the cost of Medicaid expansion.
• ·        Arkansas: Expansion has had a positive or neutral impact on employment and labor markets; but resulted in a reduction in uninsured costs to hospitals.
• ·        Colorado: Expansion supported an additional 31,074 jobs.
• ·        Kentucky: Supported more than 40,000 jobs through 2021.
• ·        Pennsylvania: Sustained more than 35,000 jobs. Medicaid expansion will create revenues that will offset any net costs to state at first and then will partially offset such costs, not including any reduction in other uninsured costs.
• ·        Montana: Responsible for an estimated increase in 5,000 jobs.
• ·        The Kaiser Family Foundation has not found any studies that show expansion to have had a negative effect on employment or on employee behavior.

The LSU team found these states all used well-accepted economic models to assess the economic impact of a significant amount of net new federal spending within their state.

“This is comparable to analysis of net new investments by new industries in a state – the focus is on net new dollars that would not have been spent in a state were it not for a program or endeavor, in this case, Medicaid Expansion,” said Dr. Richardson.

He added, “We found that new federal spending in Louisiana that would not have otherwise occurred has positively affected every region of the state. This new spending is spread across all healthcare providers including hospitals, outpatient care, pharmaceuticals, physicians and other professionals, other medical services, and the administration of the program.”

A summary of the report is available here. The full report is available by clicking here.

The Governor’s Office has also prepared district-specific information for both the Louisiana House and Louisiana Senate. That information is available by clicking here.