Impact of Medicaid on jobs

A paper in the August 2012 issue of the American Economic Journal: Economic Policy finds:

In our preferred specification, a state’s receipt of a marginal $100,000 in Medicaid outlays results in an additional 3.8 job-years, 3.2 of which are outside the government, health, and education sectors.

In short, expanding Medicaid not only provides health insurance, but has a positive impact on jobs/employment in a state that undertakes such as expansion, even beyond the health care sector. This provides more information on the stakes facing North Carolina regarding whether to go ahead with the Medicaid expansion as provided for in the ACA, or to forego this expansion. This choice became an option because of the Supreme Court’s ruling in June that the ACA was constitutionally allowable, but that the penalties that forced states to undertake a Medicaid expansion were not; hence, states can choose to expand Medicaid or not. A bit more info:

• The basic math of the decision facing N.C. is whether we will spend around $1 Billion more in state funds over ~ 5 year period to leverage around $20 Billion more federal dollars into our state via Medicaid.
• If we decide not to expand Medicaid, other states will do so, and that will reduce the degree to which other states now cross subsidize North Carolina.
• This is a very big decision, and I suspect this aspect of the Supreme Court ruling may invigorate the federalism discussion in the country.

There are at least three big issues to be considered in deciding whether to undertake the expansion. The first is the financial cost (state outlays and what federal outlays that leverages). The second is the economic impacts, which the new paper addresses, and shows that increased Medicaid spending increases employment, even beyond the health care sector. The third key issue are the benefits of providing people with health insurance who would otherwise be uncovered. Much discussion stops at costs and never gets to benefits, which is a classic public policy error. We have a chance to relieve huge amounts of human suffering via a Medicaid expansion. Here are a few links showing the positive impacts of Medicaid on health and rebutting claims that Medicaid is worse for your health than being uninsured (here, here and here).

For me, the most striking aspect of North Carolina’s huge decision is the fact that none of the politicians (from either party) who are running to be the leaders of our state seem to be talking about it.

h/t @afrakt