Troy University professors today provided research supporting Gov. Bentley’s previous claim that a UAB study touting the benefits of expanding Medicaid under ObamaCare was “bogus.” Scott Beaulier and Phillip Mixon of Troy’s Manuel H. Johnson Center for Political Economy assert that the UAB and Univ. of Alabama studies on Medicaid expansion relied on faulty assumptions to reach their rosy conclusions.
Previous studies have claimed that expanding Medicaid under ObamaCare would have as much as a $20 billion total economic impact on the state and increase state tax revenue by a billion dollars by 2020. The two Troy scholars lay out in very simple terms why those numbers are completely out of the realm of possibility.
Here are the three primary flaws with the UAB study that, if corrected, would result in Medicaid expansion clearly costing the State of Alabama far more than it would bring in:
1. UAB’s study treats Medicaid expenditures as taxable. They are not. Therefore the federal government money flowing into the state to cover 500,000 new Medicaid enrollees would not directly increase tax revenue one cent.
2. The UAB study uses an 8.6% tax rate to reach its conclusions. That means they included local taxes in their assumptions, which are not a funding source for Medicaid. The Troy study says 5.4% would be more accurate. Strike two.
3. Finally, the UAB study grossly underestimates the administrative costs of adding 500,000 individuals to the government’s healthcare rolls. UAB assumes administrative costs of 2.25%, which would be the lowest in the history of Medicaid. Alabama currently has 3.3% administrative costs, which are some of the lowest in the nation. To assume adding a half a million people to the rolls would somehow slash administrative costs to unprecedented levels is absurd. Three strikes and you’re out.
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The University of Alabama used UAB’s numbers as a starting point for their study on the economic impact of Medicaid expansion, so their findings were sure to be skewed before they even got started.
On top of that, they assume that that there are tens of thousands of healthcare workers just sitting around waiting to treat the half million new Medicaid patients. The Troy University study expresses serious concerns that expanding Medicaid would only exacerbate Alabama’s long-time problem of not having enough qualified medical professionals to meet the need, especially in rural communities.
“The media and some state officials have taken the results of the aforementioned studies and rushed to political conclusions,” Beaulier said in a blog post today. “Our study raises concerns about the expansion and creates an opportunity for dialogue about how to improve the health and well-being of all Alabamians. Offering healthcare to more people is an important goal, but claiming this potential expansion of Medicaid will create revenue is false. Taxpayers will pay billions for this new program over time, both through state and federal taxes, and thus we should all be engaged in an honest dialogue about its costs and benefits.”
To read Troy University’s full study titled “The Feasibility of the Medicaid Expansion in Alabama,” click here.
Yellowhammer will follow up soon with more on these important developments in the debate over expanding Medicaid in our state.
Follow Cliff on Twitter @Cliff_Sims
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