Report: Expanding Medicaid Would Give a Boost to Kentucky’s Economy

Influx of Medicaid Dollars Would Spur Job Creation, Economic Activity

Washington, D.C. — A report released today says that accepting federal dollars to expand Kentucky’s Medicaid program would not only bring access to affordable health care to 399,000 Kentuckians, but it would also support approximately 14,700 new jobs in 2016 across the spectrum of the state’s economy.

The report, released by Kentucky Voices for Health and the national consumer advocacy organization Families USA, spotlights a wide range of health care and economic benefits that Kentucky would experience by participating in the Affordable Care Act’s Medicaid expansion.

The report is based on the general guidelines for Medicaid expansion under the reform law: While the federal government now pays about 71 percent of the cost of the current Medicaid program, it will pay all the costs of expanded coverage the first three years of the program, 2014 to 2016, and its share will then only decrease to 90 percent by 2020. In 2016, an estimated additional $1.3 billion in Medicaid dollars would be spent on health care in Kentucky.

The Medicaid “expansion,” as it is termed, is actually a national standardization of eligibility, raising the qualifying income level to 138 percent of the federal poverty level and making single individuals or couples without children eligible for Medicaid in states where they did not otherwise qualify.

With Kentucky dealing with an unemployment rate of 8.1 percent in December 2012, a gain of 14,700 new jobs in 2016 is just one of many benefits to the state. The Medicaid expansion would also do the following:

• Increase economic activity. The increased federal funding and jobs created are projected to increase economic activity in Kentucky by approximately $1.7 billion in 2016.
  
  
• Reduce state spending on state-funded health care programs for the uninsured. Currently, states and localities pay for about 30 percent of the cost of uncompensated care. A recent study by the Kaiser Family Foundation estimates that Kentucky could save $451 million in uncompensated care costs from 2013 to 2022.
  
  
• Strengthen the state’s health care system. The American Hospital Association says that U.S. hospitals absorbed $41.1 billion in costs in 2011 for providing charity care to the uninsured. Increasing the number of residents receiving Medicaid would reduce those costs, strengthening the health care system for everyone in the state.
  
  
• Reduce costs from uncompensated care that are passed on to consumers and businesses. Some of the costs of uncompensated care are also passed along to insurance companies, which in turn raise premiums for businesses and families. In 2008, Families USA calculated that uncompensated care increased family health insurance premiums by an estimated $1,017.  By reducing the number of Kentuckians without insurance, those cost shifts can be reduced.
  
  
• Increase state revenue. Although tax structures vary from state to state, increasing jobs and business activity generally means more sales tax revenue for states or localities, and more jobs and better-paying jobs also contribute to state income. This increase could help offset the state’s own cost for a Medicaid expansion.
  
  
• Help Kentuckians become healthier and more productive. Hundreds of thousands of Kentuckians will now have access to affordable health coverage, an essential step to healthier lives and a gain for Kentucky. 

“The Medicaid expansion is a win-win-win proposition for the people of Kentucky,” Ron Pollack, Executive Director of Families USA, said today. “It would reduce the number of people who can’t afford health care, it will increase the number of jobs throughout the state, and it will strengthen the state’s economy.”

“As a low-income state and a state confronted with profound health challenges, Kentucky cannot afford to pass up this historic opportunity to expand health coverage for its residents,” Regan Hunt, Executive Director of Kentucky Voices for Health, said today. “Expanding Medicaid in Kentucky will also provide additional resources for local health care providers such as physicians, hospitals, pharmacies, home health agencies, and nursing homes. This means that more Kentuckians will have better access to quality care.”

The report used 2016 as a model, its authors say, because, although Medicaid expansion funds will be available to states in 2014, it is expected to take time for enrollment to reach the level where the program’s full economic benefit is revealed.

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Families USA is the national organization for health care consumers. It is nonprofit and nonpartisan and advocates for high-quality, affordable health care for all Americans.

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