Sarah Kliff explains:
Here’s one factor governors may want to weigh as they consider participating in the health law’s Medicaid expansion: Study after study has found that federal Medicaid dollars spur economic activity beyond the initial investment.
Researchers find that a dollar of Medicaid spending increases spending both in the health-care sector and in other industries.
“For every dollar that a state spends, federal funding filters through the state economies,” says Robin Rudowitz, associate director for the Kaiser Commission on Medicaid and the Uninsured. “That tends to go both into health service vendors as well as other sectors.”
Medicaid acts as a stimulus in two ways. First, increased federal spending on health care can, in tough budget times, free up state dollars for other spending. Medicaid spending can also ripple through the private sector, stimulating increased employment that leads to higher household spending.
Rudowitiz recently reviewed 29 state-level studies of Medicaid’s stimulative impact. Across the board, she says, “it was pretty consistent that Medicaid spending did generate economic activity.”