NC Budget and Tax Center

Expanding Medicaid is not just the right thing to do, it’s smart economics

As Governor Cooper pressures legislative leaders to join the overwhelming majority of states that have expanded Medicaid, a new report shows how much North Carolina’s economy stands to gain from going down that road.

Authored by researchers at George Washington University, the report updates an analysis originally conducted in 2014. This current iteration projects that Medicaid expansion could add more than 37,000 jobs in North Carolina by 2022 and boost economic activity by over $11 billion annually.

Expansion would bring billions a year in federal funds to provide lifesaving coverage to very low-income North Carolinians who currently don’t qualify for Medicaid. Even with the state kicking in a dime for every 90 cents in federal funds, expansion provides an incredibly good deal for North Carolina. By 2022, when Medicaid expansion could be fully phased-in, North Carolina stands to receive $4.7 billion in annual federal funding. That capital would support over 20,000 new jobs in the health care field, but would also create another 16,600 jobs in the broader economy as health care professionals spend their salaries on goods and services like housing, food, clothing, education, and recreation.

While the five largest counties in North Carolina stand to add the most jobs, the report projects that all 100 counties stand to gain from expansion and some rural communities may actually be the largest beneficiaries. Medicaid expansion is critical to rescuing many rural hospitals, six of which have closed in North Carolina since 2014. The North Carolina Senate recently introduced a bill to create a loan fund that rural hospitals could access, but that approach won’t address the deeper financial challenges that many rural hospitals face. Unlike the Senate plan, Medicaid expansion would bring new revenues to rural hospitals without taking funds away from other state priorities.

The report also addresses proposals made by some in Raleigh to expand Medicaid only if it includes work requirements and shifts costs onto extremely low-income people. Both of these ideas are almost tailor-made to force people who should be able to access Medicaid out of the program, thereby reducing the amount of federal funding coming into North Carolina and undercutting the economic upside for the state.

The real social and economic benefits of Medicaid expansion would actually be far more profound than those laid out in today’s report because it only examines the direct economic benefits of billions a year in federal funding for health care. The report does not address the multitude of long-term economic benefits for people, employers, and communities that come with ensuring that everyone has access to health care. Adequate health care avoids time lost to preventable illness, keeps workers in their jobs instead of tending to ailing family members, and allows people to grow more reliably over the course of a career. All of those benefits make Medicaid expansion good for North Carolina’s economic health.

The question now is whether North Carolina will leave the handful of expansion holdouts and join the majority of states that have already accepted the human and economic imperative to ensure that everyone should have access to quality and affordable health care.

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