4 Reasons Medicaid Expansion Is Good for Mississippi’s Economy

July 18th, 2012

Amid all of the questions swirling since the Supreme Court upheld the Affordable Care Act, one thing is clear – Medicaid Expansion in Mississippi is critically important.

Four reasons underscore this point:

**The Expansion will Increase Demand**

As we saw in an earlier post, over 270,000 working individuals who are currently without health insurance would be eligible for coverage in Mississippi. As more people receive coverage, they will demand health care services. As more people demand services, Mississippi will need workers to fill the jobs associated with providing additional services. These jobs not only include doctors and nurses, they also include medical billers and coders and other occupations that pay family supporting wages.

**Federal Match will Create Jobs**

In the first three years of the Expansion, the federal government will pay 100 percent of the costs amounting to billions of dollars coming into the state. Given Mississippi’s current economic climate, an influx of billions of dollars would give a boost to the state’s economy and create jobs in the health care sector. After three years, the federal match will slowly decrease to 90 percent of the expansion costs in 2019. With Mississippi only paying 10 cents for every dollar on the population covered through the expansion, the policy will remain an incredibly good deal.

**Funding Expansion will not Hurt the Economy**

Taxes to fund the expansion will chiefly come from three places – the health care sector, individuals earning over $250,000 and mid-size to large employers that do not provide health insurance.

Mississippi’s health care sector stands to gain significantly from the increased demand for health services. One could look at the industry tax changes as adjusting the tax structure to grow with the economy.
On the issue of high income earners, research has shown that tax increases on high income earners are less damaging than spending cuts.
Finally, mid-size to large employers that do not provide health insurance will face a penalty. Estimates show that less than 3 percent of all businesses will pay this tax. Not only is this a small share, the economic stimulus of the expansion spending will outweigh the effects of the tax.

**Expansion will Make the Labor Market More Efficient**

In an employer-based health insurance system, it is possible that people stay in a job for health insurance or stay to ensure that a spouse has access to health insurance – even if that person is not in a satisfactory situation. The scenario, also known as “job lock”, affects productivity. With access to insurance that isn’t tied to an employer, individuals will have the option to move around or start a business creating a situation in which they can be more satisfied and productive.

Conclusion: There are other reasons to move beyond the politics and to support Medicaid Expansion including the sustainability of our rural and urban hospitals. The Governor has identified the growth of the health care sector as a major component of the state’s economic development strategy. Medicaid Expansion is unquestionably an opportunity to advance this goal. In contrast, walking away from the opportunity presented through Expansion is, in the words of the Mississippi Business Journal, “A Losing Proposition.”

Sources:
• Jonathon Gruber “Will the Affordable Care Act Kill Jobs?” http://www.tnr.com/print/blog/plank/104791/gruber-care-act-job-killing July 9, 2012
• Genevieve M. Kenney, Lisa Dubay, Stephen Zuckerman, Michael Huntress “Making the Medicaid Expansion an ACA Option: How Many Low-Income Americans Could Remain Uninsured?”http://www.urban.org/health_policy/url.cfm?ID=412606 June 29, 2012
• Mississippi Business Journal “A LOSING PROPOSITION Mississippi Hospitals face yearly $152M loss if Medicaid expansion rejected” July 16, 2012