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:

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

About Don Taylor
Professor of Public Policy (with appointments in Business, Nursing, Community and Family Medicine, and the Duke Clinical Research Institute), and Chair of the Academic Council at Duke University . I am one of the founding faculty of the Margolis Center for Health Policy. My research focuses on improving care for persons who are dying, and I am co-PI of a CMMI award in Community Based Palliative Care. I teach both undergrads and grad students at Duke. On twitter @donaldhtaylorjr

4 Responses to Impact of Medicaid on jobs

  1. Brad F says:

    A few short comments:

    –While the multiplier effects of jobs is not insignificant, one could argue that if its jobs you seek, there are more efficient ways to achieve that goal. By using this lever, in the eyes of some, one may falsely justify this expense.

    –Is it not the classic tragedy of the commons argument that a state should go all in, because if they don’t, other states will reap the advantage at your expense. Justified?

    –What if a state legitimately performs a guns and butter calculus (an exercise few have honestly taken), and with their best white matter effort, decide they will be worse off financially,

    Having asked that, yes, its about the suffering. What is it worth?


    • Don Taylor says:

      good points. job impacts are a secondary impact of this decision, but in a state deciding which way to go, all points need to be considered. And the SCOTUS ruling has set off what I suspect will be a period of invigorated federalism….many southern states claim to hate the fed govt (all the way to the bank). They (we) will get a chance to put their (our) money, or lack thereof, where our mouth is.

  2. Pingback: North Carolina Republican’s Intro bill to block Medicaid expansion and exchange « freeforall

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