Economic impacts of Medicaid expansion could create tax surplus

Wednesday, November 28, 2012 | 7:16 p.m. CST; updated 10:11 p.m. CST, Wednesday, November 28, 2012

COLUMBIA — Complying with the Affordable Care Act's expansion of Medicaid might create enough tax revenue to pay for itself, according to a new study released Wednesday morning by the MU School of Medicine.

The report concludes that new jobs created by the expansion and subsequent spending would create roughly $855 million in state and local taxes, making up for the $333 million the report expects the state to pay on Medicaid expansion between 2014 and 2020.  

The jobs are expected to be created in fields directly influenced by the expansion of Medicaid, such as health care and administrative jobs, and unrelated fields such as retail, based on a multiplier for increased economic activity.

The predictions in the report are derived from a model that assumes 73 percent of those eligible for Medicaid would enroll and Missouri would begin its Medicaid expansion in the first year it is available, therefore gathering all the benefits of federal funding.

Joe Pierle, CEO of the Coalition of Healthy Economic Growth, a group of health professionals from around the state, said during a teleconference Wednesday morning about the report that his group fully endorses the findings of the report.  

"The bottom line is that this is not a political issue for us. … This is the real world," he said.

Originally, the Affordable Care Act intended to force Medicaid expansion by withholding all federal Medicaid funding if a state did not comply. This provision was struck down by the Supreme Court in June, creating what has become known as the "Medicaid option." Expansion of Medicaid to the level of the Affordable Care Act would mean expanding it to include people up to 138 percent of the federal poverty level.

If states choose to expand their Medicaid availability, the federal government would fully fund Medicaid for the state between 2014 to 2016. In 2017 the federal government would start only providing 97 percent of the cost, so that by 2020 the federal government would pay 90 percent. Although states could expand after 2014, they would not be able to claim whatever federal benefits had already expired.

Supervising editor is Katherine Reed.

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