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Medicaid expansion will boost Washington state’s economy


The recent Supreme Court ruling to uphold the health care reform law (Affordable Care Act) paves the way for states to expand health coverage hundreds of thousands of currently uninsured people.  Although many people have heard about the new Health Insurance Exchanges and patient protections in the law, the impacts of other provisions of the law are less understood.

One of the law’s key provisions that would have a big impact on low-income workers in Washington state is the ability to expand Medicaid coverage up to 138% of the federal poverty level, or about $25,000 for a family of three.

The benefit of expanding Medicaid for more low-income workers and families is clear for the more than 300,000 people in Washington who will be newly eligible for Medicaid coverage. The newly eligible Medicaid population will have access to the preventive, primary, specialty and hospital care they need to stay healthy and keep working.

But there are also important economic benefits of expanding Medicaid for both our communities and job market that Washington policymakers should be proud of. For the first several years of the expansion, the federal government will pay for 100% of the cost of the expanded Medicaid coverage (tapering and eventually holding at 90%).  This means that much-needed federal dollars will be flowing into communities across the state, bringing increased access to health care and jobs.

In fact, recent data shows that the expansion is likely to bring in more than $8 billion additional federal dollars to Washington in the first five years (2014-2019).  An online Medicaid impact calculator shows that these dollars would bring nearly $18 billion in business activity and more than 140,000 jobs.

An Economic Impact Study that was completed in Washington state just a few years ago shows that the Medicaid multiplier is basically double the impact of every $1 the state puts into Medicaid because of the federal match. The multiplier will be even larger under the ACA. Some compelling excerpts from the study:

  • Medicaid multiplier effect: For every $1 expenditure of state-supported, federally matched Medicaid by the Washington Community Health Center System (WA CHC System), the state realizes $3.54 in total economic output. The implicit multiplier of 3.54 is an extremely powerful economic inducement for the state to maintain, and, where possible, improve, Community Health Centers (CHC) Medicaid reimbursement.
  • Direct labor income impact: For every $1 of WA CHC System spending on labor, the state realizes $1.44 in labor income. The direct labor income impact of WA CHC System spending on labor in the state is $393 million, while the total labor income effect is $564 million.
  • Job creation and impact: The WA CHC System is responsible for approximately 5,192 jobs. For every one job created by the WA CHC System, 1.62 jobs are created in the state. This employment multiplier of 1.62 produces a total WA CHC System employment (jobs) impact of 8,427.
  • Overall economic impact: For every $1 of WA CHC System expenditures, the state realizes $1.77 in total economic output. This overall economic multiplier of 1.77 means that the total WA CHC System economic impact is $1.21 billion.

In these tough economic times, Washington simply cannot afford to pass up the opportunity to expand Medicaid and bring health and fiscal vitality to communities across the state.

Teresa Mosqueda, who serves as Chair of the Healthy Washington Coalition, is Legislative and Policy Director for the Washington State Labor Council.

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