December 29, 2014

A new study by Cone Health , trumpeted by the News and Record and News and Observer, says ObamaCare’s Medicaid expansion will create 43,000 jobs by 2020 with a steady flow of Federal dollars into North Carolina.

In fact, the geyser of money from Washington is supposed to grow our economy so much that state government will gain $862 million in new revenue.

Now where have we heard before that bigger government spending creates jobs? Wasn’t that the pitch President Obama used to pass his $787 billion stimulus in 2009?

Only look at this chart showing how the stimulus was going to lower unemployment according to the Obama Administration and compare their promise with what actually happened.

By their own numbers, President Obama’s stimulus was a flop. After $787 billion, unemployment didn’t drop like the Obama Administration said it would with all that new spending from Washington sloshing around the country. As University of Chicago economist Casey Mulligan noted “The economy has gotten worse than the Obama administration had predicted it would be even if Congress had spent nothing on “fiscal stimulus.” Although some are arguing that this gap is proof that more stimulus is needed, it really shows that the cost of the American Recovery and Reinvestment Act of 2009 — and laws like it — far exceed their benefits in the form of economic stimulus.”

So if the grandaddy of big spending bills didn’t work, is ObamaCare’s Medicaid expansion really going to stoke North Carolina’s economy? Let’s fact check some of the claims in the Medicaid expansion study.

The nonpartisan Rand Corporation researched the relationship between adding healthcare jobs to the economy compared with jobs in the rest of the economy. They found more healthcare jobs are associated with job losses in other sectors as resources shift to healthcare. Someone has to pay either through higher taxes for public programs like Medicaid or higher insurance premiums. Duke University economist Christopher Conover wrote ”A recent report from Catalyst for Payment Reform states “recent research from the RAND Corporation indicates that every new job added to the health care sector results in 0.85 fewer jobs in the rest of the economy.”

Since 23,000 of the 43,000 jobs the Cone Health study claims Medicaid expansion creates are in healthcare, Rand’s numbers imply a reduction of 19,000 jobs elsewhere. The Cone study has a big problem.

Commenting on a similar study tooting the horn for a job boom for Florida with Medicaid expansion, Conover says “For the average state, failure to account for the exchange subsidies means that estimated job gains from Medicaid expansion are overstated by approximately 25 percent.[5] Failure to account for job losses associated with taxes required to cover state matching funds for the expansion means that job gains are overstated by another 14 percent.[6] In short, using the methodology of studies such as those done in Florida, claims of Medicaid job gains are overstated by nearly two-fifths for the average state and may be overstated by considerably more than that for particular states considering expansion.”

Clearly, Cone’s job claims are no more solid than Obama’s stimulus. What about the rest of their conclusions?

On page 7,it claims Medicaid keeps people out of Emergency Room. That conflicts with real world evidence about Oregon’s Medicaid expansion reported by MIT and Harvard. “Giving poor people health insurance, the belief was, would decrease their dependence on hospital emergency rooms by providing them access to more appropriate, lower-cost primary care.

But a study published in the journal Science on Thursday finds that’s not the case. When you give people Medicaid, it seems they use both more primary care and more emergency room services.

“Medicaid coverage increases emergency department use, both overall and for a broad range of types of visits, conditions, and subpopulations,” says Amy Finkelstein, an economics professor at MIT and one of the authors of the study. “Including visits for conditions that may be most readily treatable in primary care settings.”

In other words, people are going to the emergency department for things that aren’t emergencies. This is exactly what policymakers hoped to avoid by giving people health insurance – including the huge increase in Medicaid coverage coming as part of the Affordable Care Act.

And the increase in ER use found in the study was significant – “about 40 percent,” Finkelstein said.

The Cone study pushing a Medicaid expansion stimulus touts improved diagnosis of conditions like diabetes. But actual results in Oregon find Medicaid expansion having little benefit on health outcomes. “We don’t see any improvements in this window in hypertension, high cholesterol or diabetes,” said Katherine Baicker, a health economist at the Harvard School of Public Health and one of the lead researchers on the project.

And nowhere in the Cone study or the editorial do we find the figure 3 billion. $3 billion is how much state money we need to match all that new Medicaid expansion stimulus money from Washington according to the Kaiser Foundation.

Wouldn’t $3 billion, money we’ll have to cut out of priorities like education or by raising taxes if we want to obtain Washington’s new Medicaid expansion, be kind of important? Instead, they emphasize $862 million in higher revenue from a Medicaid expansion stimulus effect. Not credible.
Like the Obama Administration economists who skipped over the cost of their stimulus and how a bigger government debt could hurt the economy , the Cone study ignores negative consequences from a tax increase, assuming money for our required Medicaid matching funds will come from other spending cuts. That’s a tacit admission ObamaCare’s Medicaid expansion places schools on the chopping block.

The Cone analysis blithely takes for granted that Washington will always keep paying 90% of the ObamaCare Medicaid expansion. But President Obama has already proposed $100 billion in Medicaid reductions.

By cutting one part of Medicaid while increasing another, ObamaCare Medicaid expansion is creating a moral issue. North Carolina Medicaid already covers vulnerable people like the elderly and disabled. Medicaid expansion is a new welfare entitlement for able bodied, working age adults, half of whom don’t work. As we pointed out previously, the folks claiming moral superiority by championing Medicaid expansion are putting profoundly disabled children in competition for Medicaid funding with able bodied adults who ought to provide for themselves.

Then ObamaCare’s Medicaid expansion isn’t really about health. Just follow the money.

The Cone study dwells at length on uncompensated care in nonprofit hospitals. That’s another word for charity care. Apparently, nonprofits want taxpayers to pick up the cost of charity care now. A new spin on the word charity from nonprofits where the CEO’s make millions.