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County would lose 178 jobs under Medicaid proposal

Economists project a loss of $12.6 million if Blunt’s proposed cuts take effect.
Monday, March 7, 2005 | 12:00 a.m. CST; updated 11:53 p.m. CDT, Thursday, July 17, 2008

Boone County workers and businesses could lose 178 jobs and $12.6 million under Gov. Matt Blunt’s proposed Medicaid overhaul, a statewide study by Saint Louis University economists shows.

In a county-by-county assessment, two SLU economics professors examined the fiscal impact of reduced Medicaid spending by the state, which would trigger losses of federal matching funds. Boone County ranks seventh among the state’s 67 counties in terms of projected job losses and lost revenue in the community.

For every state dollar spent on Medicaid, Missouri generates $1.63 in federal contributions. Under the proposed Medicaid cuts, Missouri would lose $379 million in federal matching dollars, which the researchers say is an important source of funding for hospitals, pharmacists, doctors and nursing homes. Of that amount, Boone County would lose $7.8 million, the researchers said.

“The federal government only brings in or gives Missouri dollars based on what we spend,” researcher Heather Bednarek said. “So if Medicaid cuts by the dollar, it’s not just that dollar that is cut. There are also federal dollars being lost. We wanted to highlight that because it is sometimes not as apparent as it maybe should be.”

Using the IMPLAN model, a method to evaluate the economic impact of lost federal dollars, the researchers traced how the Medicaid cuts can snowball outside the health care sector.

Employees at places like Boone Hospital Center and the University of Missouri Health Care system, for example, make purchases in the community, and this money ultimately flows to different sectors of the economy, SLU researcher Muhammad Islam said.

The state would face a loss of 10,130 jobs and $737.4 million in lost economic activity under Blunt’s proposal, according to Islam and Bednarek.

Dave Dillon, a spokesman for the Missouri Hospital Association, agreed that the proposed Medicaid cuts would have economic ramifications beyond those who simply receive Medicaid benefits.

“If that money doesn’t go through the health care system, those are passed along as other costs to hospitals that have to pick it up as charity care,” Dillon said. “Budget decisions don’t stop people from getting sick. Those costs come out of the system and are passed on in other ways, and it’s an indirect way to burden other people by cutting Medicaid.”

The study was conducted as a follow-up to initial research on how Medicaid cuts would affect Missouri and focused specifically on Blunt’s proposal. Islam said it is important to analyze state spending and federal matching in tight budgetary situations.

“If you are from an urban county like St. Louis, the Medicaid program is designed for people who don’t have other ways of getting health insurance and urban counties get benefits now of getting federal dollars coming into their health care system,” Islam said. “They will feel effects of these dollars being removed.”

“There might be rural counties where you have a concentration of people who are on Medicaid and the removal of federal dollars would have a significant impact,” he added.

In line with the governor’s proposal, Sen. Chuck Purgason, R-Caulfield, last week introduced Senate Bill 539, which would put Medicaid cuts into effect by reducing eligibility, increasing co-payments and eliminating some medical services. The bill also requires an annual state review of Medicaid eligibility.

On March 3, another Medicaid-related bill, Senate Bill 556, was introduced by Senate President Pro Tem Mike Gibbons, R-Kirkwood. His bill would establish a House-Senate committee to review the current Medicaid program and make recommendations to reform and restructure the system by Sept. 1.


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