States that agreed to expand coverage of Medicaid to more Americans under the Affordable Care Act are seeing “substantially faster growth” in job creation than states that have rejected the expansion, according to a new report.
One of the goals of the Affordable Care Act, aka ‘Obamacare’, is to increase insurance coverage by, among other things, expanding eligibility for Medicaid, the federal health insurance program for low-income Americans. The drafters of the law intended for the Medicaid expansion to be implemented nationwide, but a 2012 Supreme Court decision ruled that states could opt out of that provision of the law, giving Republican lawmakers an opportunity to reject the policy in their states. Leading up to the Affordable Care Act’s first enrollment period in October 2013, 24 states said they were moving forward with the expansion while 21 states said they wouldn’t expand the program and six were having ongoing debate about it. As of February 2015, GOP leaders in 15 states are still refusing the Medicaid expansion and an additional seven are considering expanding Medicaid but haven’t yet followed through, according to the Kaiser Family Foundation.
The new study, published by the market trend research group FitchRatings, found that Medicaid expansion states experienced 30 percent faster growth in health sector jobs in 2014, compared to the states that haven’t expanded the program. “The gains in healthcare jobs suggest that ACA expansion is generally positive for that sector’s employment profile,” the report concluded.
The economic case for Medicaid expansion is clear. Numerous past studies have projected that agreeing to implement the expansion could help states create thousands of new jobs in the health care sector to accommodate their growing populations of insured residents.
Additionally, since the federal government pays virtually all of the costs of expanding Medicaid, states that reject the provision are leaving that money on the table. Texas, for instance, will forfeit an estimated $9.2 billion in federal funds and miss out on $270 billion in associated state revenue by 2022 if it continues to refuse to expand its Medicaid program. The hospitals in those states are also losing money as a result of cuts that were intended to be offset by the revenue from the expansion, which has forced some of them to close. Meanwhile, in states that did expand their public insurance programs, hospitals have seen major drops in uncompensated care costs, which in some cases has saved vital safety-net hospitals that were on the verge of shutting down.
In a joint report issued by the Urban Institute and Robert Wood Johnson Foundation last summer, the health policy groups concluded that continuing to resist Medicaid expansion would “lessen economic activity and job growth” in GOP-controlled states.
Medicaid expansion has been one of the most successful provisions of the health reform law as it has extended coverage to those who need it the most — namely, low-income Americans who were previously unable to afford health insurance. States that expanded their programs saw much bigger drops in their rate of uninsured residents — and if every state accepted the expansion, the national uninsured rate would drop by a significant margin of at least two percent in the first year, according to an analysis from the New York Times.
In addition to job creation, the Medicaid expansion has been shown to have other stimulative effects on state economies. As the Washington Post explains, “Medicaid acts as a stimulus in two ways. First, increased federal spending on health care can, in tough budget times, free up state dollars for other spending. Medicaid spending can also ripple through the private sector, stimulating increased employment that leads to higher household spending.” Illustrating these effects, the Post article cites a 2011 study that found that every $1 of Medicaid spending resulted in a $2 increase in gross domestic product. The 2011 study also documented significant gains in employment, the majority (84 percent) of which was outside of healthcare and government sectors — reflecting a positive spill-over effect on other job sectors.
Of course, the impressive economic effects are only one of many benefits resulting from the Medicaid expansion. Studies have shown that extending insurance to additional low-income people can improve everything from infant health, to graduation rates, to household incomes.
Republicans, who claim the economy and job creation are top priorities for the party, haven’t said a word about the well-documented economic benefits of the Medicaid expansion. Nor has the self-proclaimed “pro-life” party acknowledged the estimated 31,325 lives that the Affordable Care Act is projected to save within the first three years, nor the 7,000 to 17,000 additional preventable deaths that will occur if resisting states do not implement the expansion. Instead, the GOP remains committed to taking health insurance away from the millions of Americans who’ve recently gained coverage, and obliterating the associated benefits for the economy and the country as a whole.