STUDY: Expanding Medicaid will boost AZ economy

By DANIELLE VERBRIGGHE
Cronkite News Service
 
PHOENIX – Expanding Medicaid eligibility to 133 percent of the federal poverty line, as called for under the Affordable Care Act, would boost Arizona’s economy and add jobs, a think tank reported Wednesday.

While that approach would increase costs for the Arizona Health Care Cost Containment System, the nonprofit Grand Canyon Institute said, it also would make the state eligible for a higher percentage of federal funding.

The group held a news conference to discuss a report that examined three options for Medicaid under the federal health care law. The others were maintaining the current policy, which froze enrollment for childless adults as the state struggled with budget deficits, and restoring coverage for everyone up to 100 percent of the poverty line.

“It’s obvious that … the option involving full implementation of the Affordable Care Act is where to go,” said George Cunningham, a former Democratic state lawmaker who serves as chairman of the Grand Canyon Institute.

The group describes itself as a centrist, nonpartisan policy group.

Because of the U.S. Supreme Court’s health care ruling this summer, states are under no obligation to expand Medicaid coverage. However, the federal government is willing to pay a larger portion of the costs if states opt to do so.

While Arizona voters passed a proposition in 2000 that required Medicaid coverage for those up to 100 percent of the federal poverty line, state lawmakers opted out of that policy last year.

Dave Wells, research director for Grand Canyon Institute and author of the report, said expanding Medicaid coverage, while raising the state’s costs, would boost the economy through the federal contribution. His report put that impact at $2.8 billion and 21,000 new jobs.

Continuing the current policy isn’t a long-term option because it conflicts with what voters approved in 2000, he said.

“They would save money in the short run, but in the long run they would be hurting hospitals, hurting people who won’t have health coverage and hurting the economy,” Wells said.

Coverage up to 133 percent of the poverty line would increase state costs between fiscal year 2014 and fiscal year 2017 from $855 million to $1.52 billion, according to the Grand Canyon Institute’s analysis. It also would increase federal funding during that period from $2.76 billion to $7.93 billion.

If the state were to restore funding to the 100 percent threshold established in 2000 its costs would be even higher because of a lower percentage of federal funding, reaching $2.73 billion, the report said. Under that scenario, it said, federal funding would rise to $6.35 billion.

Under any of those options, children up to age 18 would have to be covered up to 133 percent of the poverty line under the federal law.

Byron Schlomach, an economist with the Goldwater Institute, an independent watchdog group that promotes limited government and free enterprise, said the group’s conclusion doesn’t take into account the full implications of relying on federal money.

“Part of the problem, of course, is this money comes from somewhere,” Schlomach said. “It comes from the federal government. That’s true. But the assumptions about the economic benefits of that money I don’t believe are accurate.”

Rep. John Kavanagh, R-Fountain Hills, chairman of the House Appropriations Committee, said the state should comply with the funding levels set by voters in 2000 but can’t afford to commit more state or federal money to Medicaid.

“The federal money is also our money,” he said. “The only difference is the federal government takes it out of our right pocket instead of our left pocket.”