Jeff Alderman: Missouri analysis shows economic benefits of Medicaid expansion

Jeff Alderman, MD is an associate professor at OU-Tulsa, and a regular contributor to OK Policy’s blog

Governor Mary Fallin recently decided to forego Medicaid expansion for low-income adults in Oklahoma under the Affordable Care Act.  The Governor asserted that Oklahoma’s cost for Medicaid expansion would approach $475 million between 2014 and 2020, which would significantly jeopardize critical parts of the state’s budget like education and public safety.

As OK Policy has shown, the Governor overstates the true cost of Medicaid expansion by making unrealistic assumptions, while ignoring potential savings and new revenues. A newly released study commissioned by the Missouri Hospital Administration further calls Governor Fallin’s projections into doubt. Using sophisticated research tools, including highly regarded economic software called IMPLAN (Impact Analysis for Planning), researchers from the University of Missouri School of Medicine and a Vienna, Va.-based health consulting firm concluded that expanding Medicaid in Missouri (which has nearly double the population of Oklahoma) would cost the federal government $8.2 billion and the state $333 million between 2014 and 2020. Yet, the report strongly suggests that Missouri would actually generate additional revenue from Medicaid expansion, resulting from increased jobs and stronger economic growth in the health care sector that would produce a windfall of taxes to state coffers over seven years. Specifically, the study found Medicaid expansion in Missouri over seven years would: 

• create 22,175 new private sector jobs directly or indirectly associated with health care delivery;
• add $9.6 billion to the Gross State Product;
• produce $856 million in additional state and local taxes;
• generate $610 in private health insurance savings for an individual and $1,688 for a family.

 In other words, Medicaid expansion would yield a positive Return-on-Investment for the state of Missouri.

Of course, Missouri is not Oklahoma, and Oklahoma is not Missouri. But given the geographic proximity of the two states, and the power of the IMPLAN model, one can conclude that Medicaid expansion in Oklahoma may serve as an economic boon, rather than a fiscal drag to our state.  Older data conducted by researchers at Oklahoma State University support many of the findings in the Missouri study regarding job creation and state tax collections , suggesting this analysis is transferable across state lines.

As fallout from Governor Fallin’s decision not to expand Medicaid reverberates across our state, it would behoove our lawmakers to take a closer look at emerging data regarding economic growth and job creation. While some in Oklahoma may rejoice in rejecting Obamacare, the fiscal realities of Medicaid expansion may be too important to ignore.

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