WACO, February 28 - Several months ago, my firm released a study quantifying the benefits for Texas of expanding Medicaid under the Affordable Care Act (ACA).
We estimate that the total gains for the state over the first ten years of implementation would be $255.8 billion (in 2012 dollars) in output (real gross product) and more than three million person-years of employment (about 300,000 per year). In addition, for every $1 the State puts into the program, $1.29 is returned when taxes associated with the gains in business activity are considered. These benefits are after adjusting for likely effects if these State funds had been used in other ways.
The benefits of participating in the Medicaid expansion stem from health care spending, federal funds inflow, reduction in costs for uncompensated care and insurance, and enhanced productivity from a healthier population. Access to health care would be improved for some of the stateís most vulnerable populations, increasing their quality-of-life and productivity. At the same time, the economy would receive a sizable stimulus.
Looking at the gains by industry, itís not surprising that the largest increase falls within the health services segment ($70.8 billion in output and 988,400 person-years of employment over the first ten years of implementation). The retail trade industry group would see gains over the first ten years of $54.2 billion in output and 962,600 person-years of employment. Every industry group would be positively affected: business services; manufacturing; finance, insurance, and real estate; agriculture; and others.
In a new study released last week, we took the analysis a step further, calculating the gains for every metropolitan area, region, and legislative district in the state. Local areas across the state would clearly receive an economic boost if Texas expands Medicaid coverage under the ACA. We found that increased economic activity over the first ten years would range from just over $1 billion in smaller population centers to more than $64 billion in the largest.
More specifically, an increase in cumulative output in the $1 billion-$2 billion range over the first ten years of implementation is likely for Midland, Odessa, Sherman-Denison, Victoria, San Angelo, Texarkana, Laredo, Wichita Falls, College Station-Bryan, and Abilene. Over $2 billion and less than $5 billion for Longview, Waco, Amarillo, Brownsville-Harlingen, Beaumont-Port Arthur, Killeen-Temple-Fort Hood, Lubbock, and Tyler. Corpus Christi, El Paso, and McAllen-Edinburg-Mission fall between $5 billion and $10 billion.
Austin-Round Rock-San Marcos would see gains in output over the first ten years of an estimated $15.5 billion, with $22.1 billion for Fort Worth-Arlington and $22.5 billion for San Antonio-New Braunfels. Dallas-Plano-Irving comes to $56.5 billion, and Houston-Sugar Land-Baytown is $64.1 billion. Rural areas of the state gain $14.8 billion.
The bottom line is that benefits are substantial for every one of the stateís regions, metropolitan areas, and counties. Each legislative district (House, Senate, and Congressional) also has a sizable stake in Medicaid expansion, including thousands of jobs. With our most recent analysis (which, by the way, you can download from our website at www.perrymangroup.com), you can see how Medicaid expansion would affect your hometown so you know whatís at stake.
While Texas is still holding out, a number of other states have recently decided to participate in the expansion, including several with politically conservative leadership (Florida, New Jersey, Ohio, Arizona, Michigan, and others). In addition, resolutions or other expressions of support have been passed in favor of Texas participation by many of the largest counties including Dallas, Harris, Bexar, Travis, and others.
While the Medicaid system and ACA are not perfect, they are key aspects of the current health care environment in which Texas must function. I think we would all like to see the Medicaid system and ACA reformed to enhance efficiency and sustainability, but not participating in this expansion is simply not rational from an economic perspective. No matter your income level, political persuasion, racial and ethnic background, area in which you live, educational attainment, occupation, or anything else you care to name, you will see tangible benefits if Texas participates in this program.
Dr. M. Ray Perryman is President and Chief Executive Officer of The Perryman Group (www.perrymangroup.com). He also serves as Institute Distinguished Professor of Economic Theory and Method at the International Institute for Advanced Studies.