Proposed Medicaid expansion could create 9,000 jobs
by Becky Gillette
Published: November 2,2012
The proposed Medicaid expansion that is part of the Affordable Care Act, better known as Obamacare, would add 400,000 state residents to Medicaid, which a University Research Center report predicts would create 9,000 new jobs in Mississippi.
Former state economist Phil Pepper points out that is as many jobs as generated by the Nissan and Toyota auto plants in Mississippi combined. With the federal government proposing to pay the entire cost of the expansion the first three years, it would seem like a great deal in a state with the lowest per capita income in the country combined with some of the poorest health outcomes, such as leading the country in obesity rates and mortality from heart disease.
But Gov. Phil Bryant is opposed to the Medicaid expansion that experts estimate could result in one in three state residents being on Medicaid. Bryant is concerned that after the first three years, the cost burden then increasingly shifts to Mississippi taxpayers.
“According to a report requested by the Mississippi Division of Medicaid, the total cost to implement Obamacare in Mississippi is more than $1.6 billion over seven years, including an estimated $427 million in 2020 alone,” Bryant said. “That’s a large burden for the Mississippi taxpayer to assume. No matter on what side of the political spectrum you align yourself, when you look at the bottom line of a potential Medicaid expansion in Mississippi, it is clear we cannot afford this enormous burden.”
Bryant also said the potential administrative cost to process the additional Medicaid recipients could be a burden. Adding a projected 400,000 individuals to the Medicaid rolls would increase administrative costs by $17 million the first year and $36 million the second year.
“The Mississippi Division of Medicaid estimates the administrative cost to the state for the first three years of Medicaid expansion is $81 million,” Bryant said. “This is something that the federal government failed to tell you and is a cost we would assume at the very beginning of the expansion.”
If Medicaid is expanded in Mississippi, how will it impact the economy? And how will it impact health?
“Here’s something to ponder,” said Dr. David Dzielak, executive director of Division of Medicaid in Mississippi. “Over the past 10 years, the state has spent billions of dollars on the Medicaid program. Over that same period of time, the health indicators for the state have not improved and in some cases have gotten worse. Will spending even more money improve those indicators?”
Bryant thinks there are other alternatives to improving health care.
“To start, each of us must assume personal responsibility for our own health and our own choices,” he said. “Living a healthy lifestyle that includes regular exercise and a proper diet can help shrink Mississippi’s obesity rate and the chronic diseases like diabetes that accompany it. Hazardous activities like smoking erode our health, and we must do all in our power to fight the epidemic of teen pregnancy — an issue that has far-reaching consequences for our state.”
The governor said that in fiscal 2012, Mississippi spent seven times more money on the existing Medicaid program than economic development and public safety combined. Bryant fears the expansion would rob state resources for education, public safety and job creation as well as possibly result in tax increases.
“Undoubtedly, it would compromise our state’s resources and leave us with a bill we cannot pay,” Bryant said.
The University Research Center study said that while the Medicaid expansion does not “pay for itself,” much of the costs are offset by additions to general fund through tax revenue generated by the influx of federal expenditures.
“Policy makers will have to determine if the long-run health benefits of Medicaid expansion outweigh these remaining costs,” said state economist Dr. Darrin Webb. “In 2018 and beyond, the state’s costs exceed the additions to the general fund. For example, in the year 2025, it is expected that the state will spend $152 million for Medicaid expansion. The influx of federal dollars, however, will generate $63 million in general fund revenue, yielding a net burden to the state of $96 million. By 2025, the state will have spent $556 million on Medicaid expansion between 2014 and 2025, under the high participation scenario. Under the low participation scenario (75 percent) the cumulative costs are estimated to be $497 million. The net state fiscal burden is not significantly impacted by the participation rate.”
Health Officer Alton Cobb called the proposed expansion a “bargain.”
The study estimates that when fully enacted in 2020, the study would cost the state about $65 million annually if nearly all people eligible participate, with increases projected as health care costs rise. The state would spend $117.8 million for its share of the expansion, but would receive $53.2 million in new federal funds.
The 33-page study, authored by senior economist Bob Neal, Ph.D., said it is important to note that the benefits associated with the Medicaid expansion will only occur if residents receive health care services. “We are concerned that there will be insufficient health care professionals available to meet the increased demand for health care resulting from Medicaid expansion, as much of the state already suffers from a shortage of health care professionals.”
The study said in the long run — 30 to 40 years — the Medicaid expansion might outweigh the costs; a healthier workforce could result in a more productive workforce, leading to a healthier, more robust economy. But “estimating these possible long-term economic improvements is beyond the scope of the study.”
The University Research Center study is available at www.mississippi.edu/urc/downloads/medicaid-oct-16.pdf.
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