Analysis by the NC Budget & Tax Center shows that the rejection of Federal matching dollars for Medicaid in the budget passed last night by the NC House will have a direct and powerfully negative impact on North Carolina’s economy.
Using identical methodology to the UNC Center for Competitive Economies’ tax-cut report  touted by Republican leaders, the BTC analysis assesses the economic impact of the loss of federal matching dollars for Medicaid included in the General Assembly’s FY2011-FY13 budget.
The loss of $1.2 billion in Federal match funds for Medicaid alone will cause devastating ripple effects across the state’s economy, decreasing business output by $2.1 billion, reducing North Carolina families’ income by $713 million and eliminating 19,257 jobs over the next two fiscal years.
These cuts have a multiplier of -1.7 for labor income, meaning that for every $100 lost in Federal Medicaid matching funds, the state’s families lose $170 in income.
And these negative effects only take into account the loss of federal matching dollars; the additional cuts to the state’s share of Medicaid spending as well as other cuts in the budget will result in significant additional job losses and economic hardship.
These findings demonstrate that reliance on harmful cuts will not only compromise vital education investments and needed health care services, it will also seriously threaten North Carolina’s fragile economic recovery. Cuts to Medicaid will cost jobs and slow recovery at a time when the state is desperately in need of proven investments that will create jobs. .
BTC will issue the complete analysis on the impact of all budget spending cuts on Wednesday, June 8.
(Post Author: Allan Freyer, BTC Analyst)