PolitiFact Florida

Will a Medicaid expansion create jobs? Yes and maybe


PolitiFact Florida found that Medicaid expansion would likely create jobs, but it’s far from certain.

PolitiFact Florida

Adam Putnam is against expanding Medicaid in Florida.

In an about-face, Gov. Rick Scott announced that he would support a massive Medicaid expansion, providing healthcare coverage to an additional million Floridians thanks to billions of federal dollars. Back in 2010, the Republican governor ran on a platform of calling Obamacare a “job-killer.”

Scott’s decision led to criticism from fellow Republicans, including Agriculture Commissioner Adam Putnam.

“The expansion of Medicaid in FL does not create jobs or strengthen our infrastructure,” wrote Putnam on Twitter on Feb. 21. “And it will cost Florida $5B over the next 10 years.”

Typically when we hear about a massive influx of federal dollars into a state — whether to build light rail, improve schools or, in this case, sign up one million poor people for health insurance — folks start salivating over job creation predictions.

We wanted to explore Putnam’s claim that the federally funded Medicaid expansion won’t create jobs in Florida. The evidence we found suggests Putnam is wrong, but it’s far from certain. Healthcare is a complicated field, and the way the a Medicaid expansion will play out on the state level in Florida increases the uncertainty.

Instead of a Truth-O-Meter rating, we’re providing an overview of the research we found and what experts had to say.

Putnam points to Maine and Arizona

We’ll start with a little background: The Republican-dominated Legislature will decide this spring whether to sign off on the Medicaid expansion. The state’s tab for Medicaid, a government-run health insurance program for the very poor, has been escalating and eats up about one-third of the state budget.

Medicaid is a joint state and federal program. The federal government currently covers about 55 percent of the costs in Florida. The 2010 Affordable Care Act encourages states to expand eligibility and dangled a carrot: The feds would pay 100 percent of the expansion for the first three years, declining to 90 percent in 2020 and beyond.

We found plenty of debate among economists, healthcare experts and politicians — a Sarasota GOP chairman declared that Medicaid expansion would create jobs — while we couldn’t get an answer from Scott about his view.

A spokeswoman for Putnam sent us recent testimony before Florida legislators by experts about previous Medicaid expansions in Maine and Arizona — Maine’s governor has rejected the current expansion, while Arizona has agreed to it.

The testimony we saw didn’t address job creation, but it did make this point: Some predictions about Medicaid expansion ended up not being accurate. For example, uncompensated charity care increased, which undermines the argument that when hospitals get reimbursed for more patients, they will be able to hire more staff.

Research studies predicting job growth

We’ve viewed several studies in Florida or other states that predict job growth as a result of Medicaid expansion. We should note that they were written by or for stakeholders or those who support Obamacare.

The studies are based on the theory that as states expand Medicaid, new patients will access medical services they haven’t in the past. As hospitals reduce uncompensated care, or other caregivers take on additional paying patients, they will take in more revenue to help them hire extra workers. The job growth predictions include direct jobs in healthcare and indirect jobs (A nurse buys a new car, for example.).

Here’s a summary of some of the studies:

A 2013 study done for Families USA, a liberal group that supported the Affordable Care Act, concluded Medicaid expansion would support approximately 71,300 new jobs in 2016 in Florida.

A 2012 Florida Hospital Association study said that if the federal government spends about $24.4 billion between 2012-23, it would lead to 54,288 new jobs over the 11-year period. About 38 percent of the jobs would be in the healthcare sector.

A 2011 study written by the Florida Center for Fiscal and Economic Policy predicted 65,000 jobs as a result of Medicaid expansion. The author is affiliated with CHAIN, a group that advocates for the poor.

In 2009 — a year before the Affordable Care Act was signed into law — the Kaiser Commission on Medicaid and the Uninsured compiled findings from 29 studies in 23 states analyzing the role Medicaid plays in state and local economies. Kaiser found that “regardless of the economic impact model used, all studies have similar findings — Medicaid spending has a positive impact on state economies” — and that includes generating jobs.

While most of the experts questioning job growth focus on the healthcare sector, University of Chicago economist Casey B. Mulligan argues that increasing Medicaid will reduce employment because people will no longer need to work full time to get health insurance.

“Medicaid makes it less painful to have a low income, so people have less incentive to take actions to prevent their incomes from getting low,” he told PolitiFact in an email.

Finally, we interviewed Chris Lafakis, a senior economist at Moody’s who examines Florida’s economy, and sent him our findings from those who predicted job gains and losses. We should note Moody’s is a financial analysis firm that doesn’t have a position on the healthcare law. He said, based on Moody’s previous analysis, if all states opted in to the expansion (and they haven’t), the country would add 270,000 jobs over 10 years — including 10,000 to 30,000 more in Florida.

But even without the Affordable Care Act, the healthcare sector was growing “gangbusters” due to an aging population, Lafakis said.

So it may be complicated in the future to parse out job growth numbers and determine what extent they are a result of the Medicaid expansion or other factors.

“If you look at theoretically what should happen, it would suggest Florida will spend more money on healthcare and the rate of Florida’s economic growth will be marginally higher,” Lafakis said. “Yes, the 10,000 to 30,000 jobs figure is pretty small in the grand scheme of things, since Florida has 7.4 million jobs. But still, a Medicaid opt-in would help hospitals financially, boost state and federal spending and channel those funds to citizens with high spending rates.”

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