Dec. 08COLUMBIA, S.C. Expanding Medicaid would lead to 44,000 new S.C. jobs, the S.C. Hospital Association said Friday, firing the first major return volley in the battle over whether South Carolina should expand the federal-state program that pays for health care for the poor.
In addition to more jobs, the study says expanding Medicaid would create $3.3 billion in economic activity in the state and $1.5 billion in additional income from labor through 2020.
"Medicaid expansion will improve the health of the state and significantly boost the state's economy," said Hospital Association chief executive Thornton Kirby. "It's a win-win for South Carolina."
Gov. Nikki Haley disagrees, and Tony Keck, director of Haley's Department of Health and Human Services, has been lobbying against expansion for months.
Friday, Keck questioned the findings of the Hospital Association study, done by USC research economist Joseph Von Nessen, saying it is based on suspect methodology.
Keck noted the study was done for the Hospital Association, which favors expanding Medicaid, and its findings back the association's contentions that Medicaid expansion will create more jobs. "The pure self-interest of it is just shocking," Keck said.
The study's executive summary warns it shouldn't be considered "a comprehensive cost-benefit analysis."
A similar economic impact study, done by USC for Health and Human Services in March 2011, said a planned reduction in state Medicaid spending would result in 5,000 lost jobs. Health and Human Services went ahead with the reduction in spending, and the number of health-care jobs in the state increased to 160,600 in October from 153,400 in April 2011, according to state employment statistics.
The numbers in the study released Friday are huge tens of thousands of jobs and billions of dollars. Accepting Medicaid expansion would pump an additional $11.2 billion of federal health-care spending into the state from 2014 through 2020.
The Affordable Care Act, passed under the Democratic Obama administration, calls for expanding Medicaid to include those ages 18 to 65 who earn up to 138 percent of the federal poverty level. That translates to about $15,000 a year for an individual. Medicaid would cover about 333,000 more people in South Carolina if the expansion took effect in 2014, according to the study.
But when the U.S. Supreme Court ruled on the constitutionality of the law earlier this year, it allowed states to opt out of the expansion. Republican Haley wants the state to refuse the expansion, saying there are more cost-effective ways to improve the health of South Carolinians. The GOP-controlled state Legislature is expected to take up the issue early in its 2013 session.
The Hospital Association has an economic interest in the expansion argument. The Affordable Care Act is designed to pay to expand Medicaid throughout the country, in part, by reducing federal payments to hospitals for services that they now offer to patients with no insurance. The idea is that as more of the uninsured fall under the Medicaid's insurance umbrella, the hospitals will have fewer uninsured patients.
The study found the economic activity created by adding $11.2 billion in federal health-care spending to South Carolina's economy will generate nearly $644 million in added revenue for the state over seven years. The actual costs to expand Medicaid for the state, according to the study, would be $635 million through seven years, so Medicaid expansion would result in a net gain of about $9 million for the state budget through 2020.
The state would gain more revenue than it would spend on the expansion in 2014-2017. However, as the expansion costs paid by the federal government drop to 90 percent in 2020 from 100 percent in 2016, the impact on the state's budget would move from a net gain to a net loss. From 2020 on, the revenue that the state gets from expansion-related economic activity would cover only about half of the state's actual costs, the study said.
"Accepting the expansion would be a good deal for South Carolinians," said Charles Beaman Jr., chair of the Hospital Association board and chief executive of Palmetto Health. "There is a strong economic case for expansion, coupled with an important health benefit to the newly enrolled. Having health insurance makes a difference for individuals and families, and these benefits are shared by the business community through a strong, healthy work force."
The study focuses on spending, giving little attention to improved health. It uses statistics compiled by the national actuarial firm Milliman for Health and Human Services. Earlier this year, Keck asked both sides those who favor and those who oppose Medicaid expansion to use those numbers in discussions of the issue.
About 28,600 of the new jobs created would be in health care, the study says, raising the issue Von Nessen says of whether the state can meet the demand to fill those jobs. But the expansion also would create hundreds of jobs in retail, real estate, investment and service sectors.
While the Hospital Association is lobbying for Medicaid expansion, the S.C. Medical Association has taken a more nuanced approach, expressing reluctance to turn down federal health-care money but raising concerns that the expansion will be financially unsustainable in the long term.
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