Progressives at NC Policy Watch and WRAL.com are touting the release of a study that claims Medicaid expansion in North Carolina would “create” more than 37,000 jobs in the next couple of years.
The study is actually not new, but an updated version of a study originally released in December of 2014, written by George Washington University researchers and paid for by the Kate B. Reynolds Charitable Trust of Winston-Salem and the Cone Health Foundation of Greensboro.
I addressed the faulty assumptions of that 2014 study here – which still hold true to the updated study.
In short, the studies assume that more than half a million new enrollees added in the first few years after expansion would have access to medical care services at the same rate as current enrollees do now. But adding another half million patients into an already overcrowded system that has added one million people in the last fifteen years, at a time when the number of doctors treating Medicaid patients has declined, will mean diminishing access to care for all enrollees.
So the basic assumption behind the study is flawed. Without services being provided at the rate assumed in the study, there will be fewer federal dollars “drawn down” into the system, and that is where the study’s methodology breaks down. And never mind that all of those federal dollars for NC’s expansion would have to be borrowed, placing a burden on future taxpayers.
Add to this the observations by John Locke Foundation’s Dr. Roy Cordato that this study, and all ‘economic impact’ studies in general, suffer from blindness to scarcity and opportunity costs.
Federal money funding 90 percent of the expansion is viewed as “manna from heaven” and so is all the labor and other resources that will be used when spending it. All resources that are absorbed by this spending, including labor, are treated as if they would have no other uses and would, therefore, be costless in terms of lost jobs or GDP. This is a ridiculous assumption, particularly in a state where the unemployment rate is below 4 percent.
Indeed, for such studies the assumption of positive economic impact is baked in the cake. They are by their very design created to show job creation and economic growth for government spending, regardless of on what it is to be spent on. The question is never if the spending creates growth, but by how much.
Economic impact studies like this aren’t worth the paper they’re printed on – and should be ignored.
