Study Says State Medicaid Expansion Could Create Up to 52,000 New Jobs

Expanding Medicaid to increase the number of people eligible for the state-federal insurance plan could create between 24,600 and 52,000 new jobs over seven fiscal years, increase payroll by an estimated $1 billion to $2.1 billion, and insure nearly 300,000 Alabamians currently without medical insurance, according to a study released today by the Alabama Hospital Association.

The AHA commissioned the study from the University of Alabama’s Center for Business and Economic Research. The likely job scenario if the state expanded Medicaid today is a mid-range prediction of 30,700 new jobs with earnings of $1.3 billion and as many as 51,900 new jobs earning $2.1 billion a year. The low end is 24,600 new jobs and wages of an estimated $1 billion.

The study says that additional new federal spending on an expanded Medicaid could be as low as $9.4 billion or as high as $19.8 billion over the next seven years. State spending on expanded Medicaid would be a low of $618 million to a high of $1.302 billion for total spending of a minimum $10 billion to a maximum of $21.1 billion.

Governor Robert Bentley so far has declined to expand Medicaid, a state-federal program, due to its financial impact on the General Fund, and because he opposes the Affordable Care Act, or Obamacare, which allows for a Medicaid expansion.

William J. Canary, president and CEO of the Business Council of Alabama, said lower unemployment not only will dramatically reduce the number of Alabamians who would need Medicaid but also more employment will boost education resources.

“Creating jobs, not raising taxes is a perfect formula for all to succeed in Alabama,” Canary said. “With every percentage drop in the unemployment rate, the Education Trust Fund (ETF) nets roughly $100 million in new revenue. In fact, during the most recent fiscal year, the ETF benefited from job creation, with more than $250 million in revenue flowed into the state’s education resources.”

The study said the number of jobs would go beyond direct health care jobs if an additional 292,000 eligible Alabamians enrolled in Medicaid. Thousands of indirect jobs would be created in retail trade, professional, scientific and technical services, administration, accommodation and food service, and in finance and insurance, the report said.

The overall new business activity could be between $22 billion to $47 billion between 2014 and 2020, the study said. The 2014 Fiscal Year began Oct. 1. If Bentley decided to expand Medicaid, it could take six months or more for the expansion to kick in.

The report is based on a 2012 study by researchers at the University of Alabama at Birmingham. “They concluded that Medicaid expansion under the ACA would grow Alabama’s economy, create a net positive effect on the state budget, increase the number of people with health insurance, and improve health,” the AHA said.

Hospitals would receive the largest chunk of new Medicaid dollars.

“This report takes the UAB study one step further by providing industry-level economic impact information, including jobs by industry,” said J. Michael Horsley, president of the Alabama Hospital Association. “If you combine the impact of all industries over the six-year period, the report concludes the overall business activity would increase from $22 (billion) to $47 billion.

If Alabama expanded Medicaid to adults and families who make less than 138 percent of the federal poverty level, Alabama could get federal matching funds of 100 percent in 2014-2016, 95 percent in 2017, 94 percent in 2018, 93 percent in 2019, and 90 percent from 2020 on, the report said.

Medicaid in Alabama covered 940,000 people at a combined federal-state cost of $5.63 billion in 2012. The federal match was 68.5 percent of Medicaid costs, or about $3.8 billion. The state match in 2012 was $1.8 billion, with about $575 million coming from the General Fund, and the remainder from providers such as hospitals.

The UAH study said that taxes generated by the impact of additional federal dollars would more than cover the Alabama portion of program costs.

The Legislature changed Medicaid this year to inhibit cost growth.

The BCA’s 2013 legislative agenda included supporting efforts to reform Medicaid in order to control costs, ensuring long-term sustainability by improving efficiency, addressing fraud and abuse, and ensuring access to quality health care for Alabama citizens.

-Dana Beyerle