Report: Expanding Medicaid Would Give a Boost to New Jersey’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 New Jersey’s Medicaid program would not only bring access to affordable health care to 395,000 New Jerseyans, but it would also support approximately 14,500 new jobs in 2016 across the spectrum of the state’s economy.

The report, released jointly by New Jersey Policy Perspective and the national consumer advocacy organization Families USA, spotlights a wide range of health care and economic benefits that New Jersey 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 50 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 $1.1 billion Medicaid dollars would be spent on health care in New Jersey.

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 New Jersey dealing with an unemployment rate of 9.6 percent in December 2012, a gain of 14,500 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 New Jersey by $1.8 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. By significantly reducing the number of New Jerseyans without health insurance, the Medicaid expansion will, in turn, dramatically reduce the amount of uncompensated care in the state. That will reduce the state’s uncompensated care costs.
  
  
• Strengthen the state’s health care system. The New Jersey Hospital Association says that the state’s hospitals absorbed $1.3 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 New Jerseyans without insurance, those costs 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 New Jerseyans become healthier and more productive. Hundreds of thousands of New Jerseyans will now have access to affordable health coverage, an essential step to healthier lives and a gain for New Jersey. 

“The Medicaid expansion is a win-win-win proposition for the people of New Jersey,” 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.”

Raymond Castro, senior policy analyst at New Jersey Policy Perspective, said today, “With unemployment in New Jersey hovering near 10 percent, expanding Medicaid is critically important, not only because so many uninsured New Jerseyans will be able to obtain affordable coverage, but because of the strong impact the expansion could have in reviving the state's ailing economy with much-needed jobs and economic activity.”

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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