Governor Patrick has proposed $130 million in assessments on employers, hospitals and insurers in order to fund a shortfall in MassHealth (mostly) and Commonwealth Care (some) for the current year.
Without the funds, the state would cut back on benefits and eligibility for these health programs. For us, advocates for low-income people who rely on state coverage to stay healthy, the funds are a critical part of continuing the success of health reform.
But a strong case can be made that the proposal would improve the state’s economy. Fully funding MassHealth and CommCare increases jobs and economic growth.
Here’s why: Because the federal government doubles state spending for MassHealth and Commonwealth Care, state funds used for these programs have a high economic multiplier. It’s more than just taking a dollar from one pot and putting it in another. The federal matching means we can put two dollars to work for every dollar in state funds devoted to the programs.
Families USA has adapted a sophisticated econometric model to produce a state-by-state analysis of the economic effects of Medicaid spending. The model is built on Department of Commerce data that show the relationships among nearly 500 industries. These relationships are adjusted and updated to 2008 to reflect the state economy’s current industrial structure; trading patterns; and wage, salary, and personal income data.
The calculations (available online here, with methodology explained here) show that $130 million in state health program spending would generate almost $285 million in economic activity, and over 2,200 jobs.
Given the economic softness, this is another good reason the legislature should approve the required revenue for MassHealth and Commonwealth Care.
Brian Rosman
