Union Leader Suggests Expanding Medicaid Does Not Facilitate Job Creation

Union Leader: “Rather Than Facilitating Job Creation,” Democrats Made Medicaid Expansion Their Top Priority. A Union Leader editorial suggested that expanding Medicaid has nothing to do with improving New Hampshire's economy:

Two days earlier, Rep. Cindy Rosenwald, D-Nashua, vice-chairman of the New Hampshire House Finance Committee, had argued on the House floor that expanding Medicaid is the single most-effective step the state can take to expand access to health insurance and boost the economy. Given the choice, we wonder how many Granite Staters who earn between 100-138 percent of the poverty level would take Medicaid over a better-paying job that offers good insurance.

It is a sign of their priorities - and their views about economics - that New Hampshire Democrats made expanding Medicaid, rather than facilitating job creation, their top legislative goal of 2014. In Washington, it is a sign of their priorities, their economic thinking and their policy failures that the No. 1 priority of Senate Democrats and the White House is to expand yet again the emergency unemployment insurance benefits that were created in the summer of 2008. [Union Leader, 1/11/14]

But Studies Say Expanding Medicaid Will Create Jobs And Spur Economic Growth

Study: Expanding Medicaid Will Add Hundreds Of Jobs. A study commissioned by the state Department of Health and Human Services and completed by The Lewin Group, a health care consulting firm, estimated that New Hampshire would gain an average of 700 jobs under expansion from 2014 through 2020:

Over the 2014 to 2020 analysis period, New Hampshire gains an average of 5,100 jobs under Medicaid expansion compared to 4,400 gain under no expansion; this translates to about 700 more jobs across all sectors under expansion, compared to no expansion. [The Lewin Group, January 2013] 

Expanding Medicaid Will Increase Gross State Product and Personal Income. According to The Lewin Group study, both gross state product and personal income will increase under an expanded Medicaid program:

Over the same 2014 to 2020 period, we estimate that under Medicaid expansion, the state will see a $2.8 billion increase in the GSP, compared to a $2.5 billion increase under no expansion. Personal income will also increase under both scenarios -- an increase of $2.3 billion under expansion and an increase of $2.1 billion under no expansion, from 2014 to 2020. In 2014, gains in personal income translate to about $102 per capita under expansion and $91 per capita under no expansion. Additionally, the state will gain new tax revenues under both scenarios, spurred by economic growth, but will see a greater increase under expansion compared to no expansion ($127 million and $114 million, respectively); this translates into an offset of $13.2 million in the state elects to expand Medicaid. [The Lewin Group, January 2013]

National Association Of State Mental Health Program Directors: Expanding Medicaid Will Attract Investments To The State. A report by the National Association of State Mental Health Program Directors (NASMHPD) consolidated several studies of the projected financial impacts of Medicaid expansion and found that expanding Medicaid would increase investments in the state's medical technology and provider firms:

In addition to state financial budget gains, the new expansion will generate extensive state-wide economic activity by bringing in new revenues into individual states, thereby creating new jobs and expanding incomes in many business sectors due to what is known as a “multiplier effect.” Some states expect to accrue over $1 billion in new revenues over a 10-year period. If several states decide not to opt in to the Medicaid expansion, we can expect to see the multiplier effect to generate even more economic activity for states that opt in to the expansion effort as technology firms and provider organizations would be more inclined to focus new investments and job creation in the expansion states. Enterprising entrepreneurs also will be able to gain coverage more easily through public and private insurance. [National Association of State Mental Health Program Directors, The Waterfall Effect: Transformative Impacts of Medicaid Expansion on States, January 2013]

National Association Of Community Health Centers: Medicaid Expansion Can Have A “Multiplier Effect” As Federal Money Spurs State Economies. A report by the National Association of Community Health Centers concluded that federal dollars contributed to Medicaid expansion will have a positive economic impact on states:

The Kaiser Commission on Medicaid and the Uninsured compiled findings from 29 studies from 23 states analyzing the impact of the current Medicaid program on state and local economies. All studies found that state Medicaid spending (strengthened by federal match dollars) has had a major impact on state economies -- generating jobs, income, and state tax revenues.

Under the expansion, the 90% enhanced federal match rate starting in 2020 means that states will receive $9 for every $1 of state money spent on Medicaid services -- increasing the total impact of the multiplier effect (between 2014 and 2020 states will receive an even greater return on state dollars as the match rate will be higher than 90%). This is in addition to the match rate states receive for their traditional Medicaid populations.

 As such, it can be expected that the Medicaid expansion, particularly the enhanced federal funds, will result in a positive economic impact through a “multiplier effect.” This occurs when an injection of new money into an economy leads to more spending, which creates new demand for services and products.

[...]

 

[National Association of Community Health Centers, August 2013] 

Medicaid Expansion Would Benefit Tens Of Thousands Of New Hampshire Residents...

An Estimated 64,000 Uninsured Could Gain Coverage If Medicaid Is Expanded In Populations Making Up To 138% Of The Federal Poverty Level. According to a survey by the Urban Institute Health Policy Center, 64,000 uninsured people would qualify for Medicaid in New Hampshire if expansion included citizens making up to 138% of the federal poverty level. [The Urban Institute Health Policy Center, 6/29/12]

Lewin Group: Expanding Medicaid Will Reduce Out-Of-Pocket Spending For Program Participants. The Lewin Group study found that out-of-pocket spending would be reduced under Medicaid expansion for those making less than 138 percent of the poverty level:

 

[The Lewin Group, January 2013] 

NASMHPD: Mental Illness Coverage Will Be Greatly Improved In States That Expand Medicaid. A report from NASMHPD consolidated national and state studies of the financial impacts of Medicaid expansion and found that millions of people with mental health conditions would receive coverage under Medicaid expansion: 

Moreover, between 2014 and 2019, a full Medicaid expansion will provide health insurance coverage to 17 million people with incomes less than 138 percent of the federal poverty level (FPL) who were previously uninsured. About 40 percent of this group -- or 6.6 million individuals -- with serious or moderate mental illnesses who are currently uninsured will obtain health insurance through the Medicaid expansion between 2014 and 2019. As a result of the Medicaid health insurance expansion, researchers estimate significantly reduced mortality for people who were previously uninsured and improved health status for people with mental illness, and overall enhanced productivity. [National Association of State Mental Health Program Directors, January 2013]

... While Increasing State Spending On Medicaid By Less Than 3 Percent

CBPP: Medicaid Expansion Would Increase New Hampshire's Spending On Medicaid By Only 2.7 Percent. The Center on Budget and Policy Priorities concluded New Hampshire's share of fiscal responsibility of Medicaid expansion would only increase state spending on the program by 2.7 percent:

New Hampshire will spend $128 million more on Medicaid to cover additional enrollment of currently eligible children and parents through 2022 with or without the expansion. The expansion would increase state spending by $188 million. Altogether, this additional spending is just 2.7 percent more than what New Hampshire would have spent on Medicaid in the absence of the ACA. [Center on Budget and Policy Priorities, accessed 1/13/14]

Medicaid Expansion Would Have Other Positive Effects On State Budget

Lewin Group: Expanding Medicaid Will Reduce Costs Of Other State Programs. The Lewin Group study found that if New Hampshire uses a fee-for-service program, the state could save $67.1 million from 2014-2020 in other state programs:

  

[The Lewin Group, January 2013] 

National Association Of Community Health Centers: Medicaid Expansion Improves Federal Matching Rates. According to a report by the National Association of Community Health Centers, the increased matching for Medicaid funds are included in the Affordable Care Act (ACA) Medicaid expansion:

The new federal match rate will provide 100% federal funding for the care of the newly eligible Medicaid population for three years (2014-2016). After 2016, the funding will be reduced to 90% by 2020 and is expected to hold at 90% thereafter. The 90% level is significantly higher than all current state match rates, which range from a high of 74% to a minimum of 50%. While states' portion of Medicaid costs, as well as total administrative costs, will increase as more individuals enroll in Medicaid, these costs will be partially offset by the enhanced federal funding for the newly eligible population.  [National Association of Community Health Centers, August 2013]

CBPP: States Are Projected To Save Money By Reducing Uncompensated Care Under Medicaid Expansion. The Center on Budget and Policy Priorities (CBPP) found that expanding Medicaid could save states a significant amount by reducing uncompensated care (emphasis original):

Uncompensated care. By reducing the number of people without health insurance, the Medicaid expansion will reduce state and local costs for uncompensated hospital care for the uninsured. In 2008, state and local governments shouldered $10.6 billion, or nearly 20 percent, of the cost of caring for uninsured people in hospitals. [Center on Budget and Policy Priorities, 10/11/12]

Lewin Group: Expanding Medicaid Shifts Cost Of Covering Inmates From State To Federal Government. A study commissioned by the Department of Health and Human Services and completed by The Lewin Group found that New Hampshire could save on the cost of providing care for inmates under Medicaid expansion: 

In 1997, a federal rule was adopted that permits Medicaid to cover health care costs for inmates admitted to an inpatient facility overnight, assuming that inmate is otherwise eligible for Medicaid. However, few states have taken full advantage of this rule because most inmates, including those in New Hampshire, do not qualify for Medicaid under current eligibility criteria. Thus, these costs are currently endured by the state.

However, in 2014, if New Hampshire elects to expand Medicaid, inmates who leave the prison for over 24 hours and are admitted for inpatient services will become eligible for Medicaid under the new eligibility criteria and Medicaid will cover services for the duration of the inpatient stay. This applies to all inmates “admitted as an inpatient in a hospital, nursing facility, juvenile psychiatric facility or intermediate care facility that is not part of the state or local correctional system.”3 Additionally, as “newly eligibles,” the federal government will pay for 100 percent of incurred inpatient costs through 2016, which would gradually decrease until leveling off at 90 percent in 2020 and all years to follow. This will result in significant savings to the state corrections department. [The Lewin Group, January 2013]