Part 2: So You Want to Cut Medicaid. Do You Really?

If you want to protect those job creators, you probably want to protect Medicaid.


Last week, I described how Medicaid is a joint federal and state program; that it used to be funding more by the federal government than the state, but that federal funds are drying up. I also asked my readers a few questions about their own families, hopefully, showing them that their own family might use or already be using Medicaid even if they are not poor.

I think that federal/state point is important because here in Illinois, we're always being told that our state programs are in trouble because our Democratic legislators caused a big problem, forgetting that Illinois was majority Republican long before it was majority Democratic, but no one every seems to care about that. However, the point is that the cut in federal funding is the problem we're having with Medicaid. That's because our federal legislators feel that war and tax cuts for the wealthy are more important.

Our federal issue discourse is about cuts, cuts cuts because multinational corporations that send jobs to India and China are the "job creators".

Well, guess what. Medicaid is a job creator too.

In 2009, the Center for Tax and Budget Accountability, a bi-partisan  data- driven, research and advocacy think tank, issued a report titled Medicaid Plays a Critical Role in Illinois' Economy. In the report, CTBA shows how Medicaid "has a positive ripple effect throughout the state and local economy." CTBA found that Medicaid has a multiplier effect meaning:

...Medicaid dollars circulated through the economy have a far greater economic impact than just direct reimbursement to pay providers of Medicaid services. Medicaid also pays for a portion of the wages paid to the professionals, technicians, custodians and administrators employed by health care providers. These wages are then used to pay mortgages, buy groceries, pay bills and buy goods and services in the local consumer economy. Medicaid reimbursement is also used to acquire medical and other supplies from local businesses. These funds are then applied to support employees of the supply companies. In essence, Medicaid spending generates business activity throughout the medical industry, supports wages for health care workers, fosters consumer spending, boosts state tax revenue and produces general economic output. The multiplier effect is enhanced with respect to Medicaid because new dollars – federal matching funds – are pulled into the state economy.

In 2009, this multiplier effect resulted in $46 Billion of additional business activity, $15.8 Billion in Wages and 385,742 jobs statewide.

Economists in Florida came up with similar findings, that Medicaid cuts are a job killer. The Illinois Hospital Association agrees that Medicaid cuts are a job killer in 2012 Illinois.Although, one cannot help but wonder if medical spending has become the new economic bubble for this decade as real estate was in the 1990s and early 2000s.

The downside of cutting state Medicaid is that the state cut will cut federal matching dollars coming into the state, having a reverse multiplier effect on Illinois' economy. CTBA also noted that late payments to providers has hampered the positive economics of Medicaid and that increased us of Medicaid comes from the "unaffordability of private coverage for many struggling families as health care costs creep upward."

So, we have seen how federal spending cuts have adversely affected state Medicaid programs and how cuts to those programs lessen federal matching. We have also seen how the combined cuts result in loss of economic activity and jobs. When U.S. Congressman, Robert Dold, tells you that he's all about protecting the job creators, you might ask him what he's done to protect Medicaid, a true job creator.

This post is contributed by a community member. The views expressed in this blog are those of the author and do not necessarily reflect those of Patch Media Corporation. Everyone is welcome to submit a post to Patch. If you'd like to post a blog, go here to get started.

ebuddha April 24, 2012 at 04:28 PM
Kathy - i'm not sure if you realize that Illinois receives 75-80% of the Federal Taxes that its citizens pay back in Federal spending within the state. This has been fairly constant for at least the past 25 years. The national 'average' is for a state to receive 87%. So while Illinois is coming up a bit short, it's not drastic. Here is a link for you to see the details: http://www.taxfoundation.org/research/show/22685.html Having this information in hand, the original article's premise is even less valid - because Federal payments to Illinois have NOT decreased materially, but instead have fluctuated within a steady range for more than 2 decades. There are a lot of things wrong with healthcare in the U.S. but I'm not sure insurance companies are the ones causing the massive rise in costs nor am I convinced that a single-payer system would bring down costs. The single largest factor (IMHO) contributing to the healthcare crisis in this country is the average person's expectations. On the one hand, mothers take their kids to the doctor for every sniffle - to the point that our antibiotics are losing the battle against the bacteria that is evolving as a result. On the other hand, end-of-life care is burdening an already resource constrained system. I highly reccomend reading/watching a 60 Minutes episode that covered this very well: http://www.cbsnews.com/2100-18560_162-6747002.html
Kathy Oetker April 25, 2012 at 03:00 PM
(tongue in cheek) Thanks for shedding light on my ignorance. This discussion has gotten far from the discusiion and Medicare and Medicaid. Why can't Medicare negotiate prices with the drug comapanies like Insurane companies?
ebuddha April 25, 2012 at 04:32 PM
Kathy - I'm not sure how it has gotten away from discussions on Medicare/aid. The article asserts that reduced federal contributions to the state are causing a problem. You picked up on that theme and further asserted it is a problem in other areas as well (though no specifics were offered). The facts contradict both you and Ms. Gill.
Ellen Beth Gill April 25, 2012 at 04:58 PM
It is what it is. I supported my comments with sources. I don't see the argument against my comments supported at all.
ebuddha April 25, 2012 at 05:14 PM
The study that your article refers to makes absolutely zero sense. They assert that "medicare dollars are paid to workers to in turn pay mortgages and buy groceries". As if dollars spent by others on other things just sit in the cash register forever. You're trying to make people think that dollars spent by the Feds on healthcare in our state somehow are 'better' dollars, able to run further and jump higher. I've said it before in reply to one of your articles: a dollar is a DOLLAR no matter who is spending it and no matter where it is being spent. To suggest that somehow Federal medicare dollars spent in Illinois create more jobs than other 'dollars' simply defies the law of economics. You may have quoted other sources but you (and the PATCH Network) have not applied any "reasonableness" filter in sharing those sources. You also seem to attempt to use those sources to advance your true agenda of opposing Congressman Dold. Whle your posts on this website may attempt to conceal your true colors, your classless blog reveals it clearly. Your 2-part posts regarding Medicare/aid claim that more money needs to be thrown at these programs. You claim other programs are taking away and that this could also be seen as a jobs program. None of your claims can be supported with facts. I've offered a half-dozen posts that prove the counterpoint.


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