Will Doran, a News and Observer/Politifact reporter has given a Mostly True rating to Governor Cooper’s claim that North Carolina is already paying for Medicaid expansion.
I have long been a supporter of Medicaid expansion as anyone who has read much of what I have written will know. I have a piece coming out in the next issue of the North Carolina Medical Journal that tries to make the case for the expansion (I was written last Fall, with a light update). I consider the case for expansion to be fairly straightforward, but there are many complicated moving parts to get both the coverage and financial numbers straight, and certainly to estimate what I would call derivative effects like jobs.
Just to help identify some of the complexities, I include a copy of my correspondence with Will when he asked my advice on this Fact Check. He wrote me On Jan 11, and I answered later that night while riding in a cab in Washington DC, so its not the most beautiful prose but you get the point (I italicized and bolded my answers here for clarity & I removed Will’s email and phone number):
Some answers below.
From: Doran, Will
Sent: Wednesday, January 11, 2017 7:51 PM
To: Don Taylor
Subject: Media inquiry on Medicaid in North Carolina
Hi Professor Taylor, I’m a reporter for PolitiFact North Carolina and the News & Observer in Raleigh. I’m working on a fact-check about Medicaid and was hoping you could answer what’s probably a stupid question that I have.
North Carolina residents and business pay 2.4 percent of the taxes the U.S. government collects. Is it safe to also say that the state’s taxpayers cover about 2.4 percent of the federal government’s Medicaid expenses? Or is the math much more complicated in reality?
Math is more complex than this. It is possible this is a reasonable estimate, but I am not sure without some work and digging.
Here is a toe dip into the complexity. Social Security payroll taxes are a key source of federal taxes paid in, but they don’t go to Medicaid expansion, and another large tax are Medicare payroll taxes that don’t pay for Medicaid expansion. Medicaid (federal share) is generally funded from general tax revenue (income taxes) and there are a variety of taxes levied by the ACA that could be thought of as paying for the expansion. This post address expansion and taxes, but doesn’t really answer your question. https://donaldhtaylorjr.wordpress.com/2017/01/05/did-gov-cooper-raise-taxes-yesterday/
This link lists the ACA taxes https://www.irs.gov/affordable-care-act/affordable-care-act-tax-provisions1
I also have one question that’s more policy-related, if I may take up a bit more of your time. Gov. Roy Cooper has said Medicaid expansion could create tens of thousands of jobs in North Carolina. But I know other states have not necessarily had that kind of result.
Kentucky, for example, has actually lost health care jobs since accepting the Medicaid expansion – despite a study that said the state would gain jobs. Is there any reason to believe that either scenario (the job gains or the job losses) is more likely to happen in North Carolina if we accept the expansion?
I am not sure. Surely someone must have done a summary of job impacts across states? Why did you pick Kentucky? There is a new model out focused on Michigan that predicts big job impacts….but I have read some criticisms of the study say the effect projected is implausibly large. The methodology of any given study in question is important. This is not really my area, but I will say from policy standpoint that I think job gains are what I would call derivative effects and not the primary intended effect. However, leveraging Billions of dollars into the state that wouldn’t otherwise be spent in the state will either increase jobs and/or wages paid to existing employees and/or expand revenue to health care providers that can be used for other purposes (like have a better bottom line). So, you could have derivative economic benefits even if you didn’t create more jobs. I don’t know this area better in part because I don’t think of jobs as the main point of Medicaid expansion. The key issue is how important is it to expand health insurance coverage? If it is impt, there will never be a more financially advantageous way for the state to do it.
I am sorry the answers are not simpler.
I appreciate any help you can give me about either of these questions. And if a phone call works better for you, my number is xxxxxxx.
PS here’s a news article on the Kentucky situation if you’re not already familiar: http://www.wdrb.com/story/30603715/kentucky-medicaid-expansion-has-not-produced-jobs-beshear-claims