WASHINGTON and NEW YORK – A new study by researchers at the George Washington University School of Public Health and Health Services, Estimating the Economic Gains for States as a Result of Medicaid Coverage Expansions for Adults, finds that the Medicaid expansions under consideration in Congress not only will improve the health and well-being of previously uninsured individuals and families but also will generate significant economic returns in new business activities, jobs, salaries, and wages. The report concludes that the rate of return is between two and six dollars for every dollar invested.

“Despite the financial challenge, Medicaid remains an effective and efficient model for covering the nation’s most vulnerable uninsured populations,” said Peter Shin, Ph.D., M.P.H., associate research professor in the Department of Health Policy and a lead study author. “Expanding Medicaid results not only in more accessible care but strengthened state and local economies.”

The national health reform proposals in the House and Senate uniformly include Medicaid expansions for poor nonelderly adults who traditionally have been excluded from the program. This investment could be expected to result in major economic gains, particularly in medically underserved communities at risk for deep poverty, elevated unemployment, and a greater burden of illness. The report finds that Medicaid eligibility expansions could be expected to:

  • Insure an additional ten million non-elderly Americans by 2014 with the greatest proportional gains among the uninsured in southern, southwestern, and plains states as a result of these states’ higher overall poverty rates and higher rates of uninsured low-income adults;
  • Lower health care costs by improving access to health care for the treatment and management of chronic health conditions; and
  • Improve workforce productivity among lower income workers, who disproportionately would benefit from the expansions.

More notably, the report estimates that a $10 million state investment in Medicaid would generate, on a nationwide average, $29.1 million in business activity, 247 jobs, and $10.3 million in salary and wages.

“Medicaid represents essential revenue for community health centers, but what this study shows is how important Medicaid is to the economic health of medically underserved communities at large,” said Julio Bellber, president and CEO of the RCHN Community Health Foundation. “A Medicaid expansion is a major prescription for economic growth.”

The House and Senate measures would expand Medicaid both by eliminating the categorical restrictions applicable to adults since the law’s 1965 enactment and by establishing a national income floor pegged to the federal poverty level rather than state-defined levels, which historically have been very low. The measures vary in the extent to which they assume state contributions to the cost of the expansion in both the short-term and long-term. Given the economic payoff to states and localities, the report recommends the maximum possible federal investment in order to eliminate expansion barriers.

Estimating the Economic Gains for States as a Result of Medicaid Coverage Expansions for Adults is available here.

About the RCHN Community Health Foundation
The RCHN Community Health Foundation (RCHN CHF) is a New York-based not-for-profit operating foundation dedicated to supporting and benefiting community health centers (CHCs) in New York state and nationally. The Foundation develops and supports programmatic and business initiatives related to community health center access, pharmacy and health information technology through strategic investment, research, outreach, education, and coalition building. For more information about RCHN CHF, contact Chief Operating Officer / EVP Feygele Jacobs at (212) 246-1122, ext. 712, or visit www.rchnfoundation.org

About The George Washington University Medical Center
The George Washington University Medical Center is an internationally recognized interdisciplinary academic health center that has consistently provided high-quality medical care in the Washington, DC, metropolitan area for 176 years. The Medical Center comprises the School of Medicine and Health Sciences, the 11th oldest medical school in the country; the School of Public Health and Health Services, the only such school in the nation’s capital; GW Hospital, jointly owned and operated by a partnership between The George Washington University and Universal Health Services, Inc.; and the GW Medical Faculty Associates, an independent faculty practice plan. For more information on GWUMC, visit www.gwumc.edu.