Bad Bill Of The Week: Paging George Orwell, Medicaid Expansion Edition

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Bad Bill Of The Week: Paging George Orwell, Medicaid Expansion Edition

Published: Wednesday, April 1st, 2015 @ 9:07 pm
By: Civitas Insitute ( More Entries )

Publisher's note: This post, by Brian Balfour, was originally published in the Bad Bill of the Week section of Civitas's online edition.

This week's Bad Bill has a title only George Orwell would love. Senate Bill 354, sponsored by Angela Bryant (D-Nash) and Ben Clark (D-Cumberland) is titled "North Carolina Healthcare Jobs Initiative."

Don't be fooled. This bill isn't about creating jobs in the healthcare industry, it's another bill proposing to expand Medicaid. And rather than creating jobs, it would in fact hamper the economy and spur unemployment.

Desperate because their past attempts to expand Medicaid have failed, liberal progressives have been advancing the "Medicaid expansion will create jobs" canard to try to broaden support for expansion.

Emboldened by a study purporting to show that expanding Medicaid in NC would "create" 43,000 jobs and generate $21 billion of additional investment in five years, the left is attempting to leverage the desire for job creation to generate sympathy for their Medicaid expansion cause.

Small problem: The assumptions baked into studies claiming Medicaid expansion would create jobs don't jibe with reality.

This was explained in a January Civitas Institute article:

The job growth claims are based on the state's "drawing down" additional federal funds due to Medicaid expansion ... This income received by health care providers is then spent on suppliers (such as medicine, medical supplies, etc.) and in their community 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 those providers for the services.

One problem, however, is that Medicaid is already stretched thin, with too many patients chasing too few doctors. North Carolina's Medicaid program has added a whopping 800,000 additional patients in the last dozen years — at a time when the number of Medicaid providers has decreased. Expansion would add as many as half a million more patients by some estimates. How does a shrinking pool of doctors provide care for 1.3 million additional patients?

With newly eligible Medicaid patients unable to see doctors, services won't be provided and when no service is provided, no federal funds are "drawn down." The assumptions backing up the job growth claims don't reflect the very real supply constraints in the Medicaid program.

Moreover, other factors refute the false narrative of Medicaid expansion as economic stimulus. According to research by State Budget Solutions, Medicaid expansion would shift more of NC's economy from the private sector to the government sector. Because the economic health of states is closely linked to the private share of its economy, granting a government program more control over the state's resources will drive down job growth and wages.

Finally, Medicaid expansion would serve to steepen the "welfare cliff." This is an effect whereby — on the margins — people face losing valuable government benefits if they choose work. Accepting work would actually make them worse off. The net impact is more people deciding not to work for fear of losing the benefits, causing higher unemployment.

Studies by the National Bureau of Economic Research, the Congressional Budget Office, and university economists all find that expanding Medicaid eligibility discourages work and is associated with a decrease of jobs. Based partly on this research, the Foundation for Government Accountability estimates Medicaid expansion could cost North Carolina up to 94,000 jobs.

Because it uses Orwellian, misleading rhetoric to try to fool people into thinking a Medicaid expansion bill is really a job-creation bill, when in fact it would do the opposite, Senate Bill 354 is this week's Bad Bill of the Week.

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