Download Medicaid

The Economic and Fiscal Impact of
Medicaid Expansion in Pennsylvania
Pennsylvania Economy League, Inc.
Econsult Solutions, Inc.
April 2013
Project Overview
• Sponsors: PA Health Funders Collaborative
• Research Team: PA Economy League, Inc. (PEL);
Econsult Solutions, Inc. (ESI)
• Project Goals
– Understand Economic and Fiscal Impacts of Medicaid
Expansion in PA
• Not analysis of cost of ACA
• Only focused on incremental impact of Medicaid Expansion
– Provide Nonpartisan Information to Lawmakers for their
use in decision
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What’s at stake
• PA facing decision to expand Medicaid to individuals making
less than 138% of federal poverty level
• Kaiser Family Foundation (KFF): coverage increases by 542,000
by 2016, with 313,000 currently uninsured
• Feds fund 100% of newly eligible in 2014-2016; declines to
90% by 2020
• Federal share of cost: $3.8B in 2016; $5.5B in 2022
• State share of cost: $29M in 2016; $645M in 2022
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Overview of analysis
• Calculate 3 key pieces prior to impact modeling
– Reductions in state spending
– Increases in household discretionary income
– Increases in spending on healthcare
• Economic and revenue impact – Use IMPLAN economic
model to calculate increase in jobs, output, wages and
resulting state taxes due to new spending
• Fiscal Impact – State budget impact due to program savings,
program costs and new tax revenues
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Summary of Key Findings:
PA Budget Savings
• Expansion lowers state-funded healthcare costs
Savings Category
2016
2022
2013-2022
General Assistance (eligible for expansion)
$277.5M
$401.8M
$2,973M
State Uncompensated Care Payments (DSH) (reduced
uncompensated care burden in state)
$48.6M
$70.3M
$520.4M
Medically Needy (some eligible due to income)
$36.2M
$52.4M
$387.8M
Select Plan for Women (some eligible due to income)
$0.3M
$0.3M
$2.6M
Mental/Behavioral Health (some eligible due to income)
$42.5M
$61.5M
$454.8M
Drug/Alcohol Abuse (some eligible due to income)
$2.2M
$2.7M
$22.4M
Prison/Incarcerated (in patient hospital care)
$5.2M
$6.2M
$52.5M
$412.5M
$595.2M
$4,414M
Total State Healthcare Savings
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Summary of Key Findings:
New Spending in PA
• Federal funds generate new spending in PA
Total New Spending Due to Expansion
Spending Category
5/23/2017
2016
2022
2013-2022
State Fiscal Savings
(costs)
New Household
Spending
New Healthcare
Spending
$384M
($50)M
$1,572M
$1,139M
$1,884M
$12,357M
$1,773M
$2,885M
$18,507M
Total New Spending
$3,296M
$4,719M
$32,436M
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Summary of Key Findings:
Economic Impact
• Expansion leads to new jobs, economic activity,
GDP, wages and earnings
Category
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2016
2022
Jobs
34,727
42,780
Economic Activity
$5.3B
$7.3B
GDP
$3.0B
$4.4B
Employee Wages
$1.8B
$2.6B
Earnings
$2.1B
$2.9B
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Summary of Key Findings:
Regional Economic Impact
• Expansion has significant impacts on all PA regions
2016 Economic Impact by Regions
Region
Lehigh Central
8,080
Economic
Activity
$1,164M
New East
4,932
$677M
$360M
$214M
New West
2,077
$263M
$140M
$88M
Southeast
10,368
$1,749M
$1,029M
$621M
Southwest
7,535
$1,115M
$628M
$382M
Statewide
34,727
$5,343M
$3,024M
$1,822M
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Jobs
GDP
$649M
Employee
Wages
$397M
8
Regions
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Summary of Findings:
Revenue Impact
• Expansion results in increased state tax revenue totaling
$3.6 billion from 2013-2022
Category
2016
2022
New Income Tax Revenues
$62.8M
$89.2M
New Insurance Gross Receipts Tax
Revenues
$131.0M
$187.6M
New Corporate Income Tax Revenue
$10.3M
$14.9M
New Sales Tax Revenue
$87.7M
$126.6M
Total Tax Revenue Impact
$291.8M
$418.3M
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Summary of Findings:
Fiscal Impact
• Combination of State budget savings and new revenues
leads to net positive fiscal impact
2016
2022
2013-2022
Total State Healthcare Savings
$412.5M
$595.2M
$4,414.0M
Total Tax Revenue Impact
$291.8M
$418.3M
$3,550.4M
Less Total State Spending
($29.0)M
($645.0)M
($2,842.0)M
Net Fiscal Impact
$675.3M
$368.5M
$5,122.4M
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Concluding Thoughts:
Big Picture
• This is a big decision – hundreds of thousands getting coverage, billions of
dollars being spent by Federal and State governments
• Must remember that this is about the incremental economic and fiscal
impact of expanding Medicaid, not total cost of ACA
• Also not about other benefits of expanded coverage
• New coverage will replace some current state funded health care for low
and moderate income residents, resulting in savings
• As match declines to 90%, those savings are exceeded by costs, but new
revenues from economic activity make up difference, for positive net fiscal
impact
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Now Have 4 Studies on the Economic
Impact of PA Medicaid Expansion
• Families USA: earliest one
• RAND: paid for by the Hospital Association
• PA Economy League: paid for by PA Health
Funders Collaborative
• Independent Fiscal Office: Paid for by tax
payers.
Methodologies Used in Studies
• All 4 used different reputable economic
impact models to come up with their
economic impact projections.
• Families: REMI
• RAND: RIMS II
• PEL: IMPLAN
• IFO: “Industry multipliers from US Bureaus of
Economic Analysis”
New Enrollees
• All found it would result in a substantial
number of new Medicaid enrollees (at least
half a million people):
– Families: 682,000
– RAND: 500,000
– PEL: 546,000
– IFO: 589,000
Uninsured
• 3 of 4 showed a sizable decrease in the
number of uninsured.
• From a low of 17% to a high of 26%
– Families USA: not addressed
– RAND: 350,000
– PEL: 313,000
– IFO: 225,000
New Jobs
• 3-4 studies predicted a sizable number of new
jobs as a result of the economic impact of
Medicaid expansion:
• Families USA: 41,200
• RAND: 35,000-39,000
• PEL: 38,089-47,137 (avg. salary of $52,000/yr
• IFO: Not addressed in study
New Tax Revenues
• 3-4 studies found the new jobs and economic
impact from the new federal funding would
product additional tax revenues for the State.
• Families USA: Not addressed in the study.
• RAND: $199M in 2016; $241M in 2020; Total
$1.5 B 2014-2020
• PEL: $292M in 2016; $418 in 2022; Total $3.6B
2014-2022
• IFO: $210M in 2016; $234 in 2021
State Costs
• There are state costs that are small when the
federal match is 100% and increase as
enrollment increases and the match goes
down to 90%.
• Families & IFO did not show costs in isolation
• RAND: $42M in 2016; $544 in 2020; Total
$1.6B 2014-2020. Did not do state savings.
• PEL $29M in 2016; $645 in 2022; Total $2.8B
2014-2022 (after subtracting savings.)
Total Fiscal Impact
• 2-4 Studies showed that their would be a positive fiscal
impact for the state with Medicaid expansion, because the
state savings and increased state revenue would exceed
state costs.
• One study showed positive fiscal impact at the beginning
and small state costs (less than 1% of state budget dollars in
the out years.)
• Families USA did not address in study.
• RAND: $157M in 2016; ($303M) in 2020 : Total ($180M)
2014-2020
• PEL: $675M 2016; $369M in 2022; Total $5.1B 2014-2022
• IFO $543M in 2016; $299M in 2021
Conclusion
• 4 studies using 4 different economic impact
models all showed that expanding Medicaid in PA
makes positive economic sense, not only for the
Pennsylvania state budget, but for the PA
economy as a whole.
• Expanding Medicaid also makes sense for the
health of those who would receive coverage.
• It would be a terrible injustice to have those up to
400% FPL be able to get help paying for their
health care coverage, while those under 100%
FPL, not presently eligible for MA receive none.