Debunking those Medicaid Expansion job claims

by Brian Balfour, Civitas Institute, March 25, 2019.

On the first day of the regular 2019 legislative session, Democrats introduced legislation to expand Medicaid in North Carolina. Among the justifications for expansion given at the press conference introducing the bill was that it would create more than 40,000 jobs in North Carolina.

This claim, however, doesn’t stand up to scrutiny.

The figure comes from a 2014 report produced by George Washington Universityresearchers. The report declared that North Carolina will miss out on 43,000 jobs over five years, along with $21 billion in federal money, if it continues to refuse Medicaid expansion as prescribed in Obamacare. The study’s findings largely echo other reports, such as a January 2013 study produced by the North Carolina Institute of Medicine (NCIOM) which came to similar conclusions.

The job growth claims are based on the state’s “drawing down” additional federal funds due to Medicaid expansion. As the GWU report describes, “Since most of the cost of a Medicaid expansion would be borne by the federal government, expansion would result in billions of dollars in additional federal funding flowing into North Carolina. These funds will initially be paid to health care providers, such as hospitals, clinics or pharmacies, as health care payments for Medicaid services.”

The income received by health care providers is then spent on suppliers (such as medicine, medical supplies, etc.) and in communities on goods and services such as groceries, clothes and movies.

The fatal flaw in this methodology, however, is that in order to “draw down” federal Medicaid dollars, actual medical services need to be provided to Medicaid patients. It is only when doctors actually treat Medicaid patients that the federal government pays providers for the services.

For instance, the NCIOM study assumes that more than 500,000 North Carolinians will not only enroll in Medicaid under expansion, but each would receive — on average — approximately $4,300 in medical services each year. As these services are rendered, the doctors and hospitals are paid by the federal Medicaid program, which injects the money into the state’s economy and spurs the job creation, according to the report.

But here’s where the jobs claims fall apart: North Carolina already suffers from a shortage of doctors, especially of those accepting Medicaid patients.

Medicaid rolls in North Carolina have ballooned from about 1 million in 2003 to roughly 2 million today. Adding another 500,000 would push the program over 2.5 million enrollees and mark more than a million-and-a -half new Medicaid enrollees in about 15 years.

All this would take place when the number of physicians accepting Medicaid patients is dwindling. According to state Medicaid Annual reports, from 2003 to 2016, the number of physicians enrolled as Medicaid providers plummeted by more than 10,000, a drop of 28 percent.

Imagine adding since 2003 the equivalent of the entire combined population of Wake and Forsyth Counties to a group of people already fighting over a shrinking pool of doctors. Making matters worse, a 2012 article in Health Affairs found that one-fourth of North Carolina’s physicians would not take any new Medicaid patients.

Indeed, a December 2014 report from the federal Department of Health and Human Services examined Medicaid enrollee access to medical providers.  The report’s findings confirm the concerns regarding lack of access for Medicaid patients. Half of the primary care and specialty providers contacted in the study could not even offer appointments to Medicaid enrollees.

In short, the supply of doctors is not large enough to meet the current Medicaid enrollee demand and expansion would only make this problem far worse.

Such extreme supply constraints tell us that if North Carolina were to expand Medicaid, the newly enrolled would have great difficulty actually seeing a physician. Coverage will not equal access.

If new enrollees in the already overcrowded Medicaid program have limited access to care, then a very limited number of services will be provided. With fewer services provided, fewer federal dollars are “drawn down” to Medicaid providers. The whole premise behind the study purporting to show job creation is flawed.

Moreover, the hospital tax being proposed to pay for expansion would force hospitals to either shift higher costs onto private insurance patients or cut costs – potentially decreasing jobs in the healthcare sector.

Finally, research shows that expansion actually has a significant negative impact on employment. A comprehensive study released in 2014 by the National Bureau of Economic Research, for instance, found that past Medicaid expansions to enroll able-bodied, childless adults reduced the likelihood of working by up to 10 percentage points.

Not only are the job creation claims unsupportable, the more likely scenario of Medicaid expansion would be a net loss of tens of thousands of jobs, creating significant harm to our economy.

https://www.nccivitas.org/2019/debunking-medicaid-expansion-job-claims/