Expanding Medicaid Will Not Stimulate the Economy or Create Jobs

Previous studies predict large and beneficial macroeconomic effects of the Affordable Care Act’s Medicaid expansion, by calculating the economic benefits to individual states of the inflow of federal dollars predicted to ensue. However, in calculating those benefits, these studies typically ignore one or more offsetting factors, most notably the taxes necessary to pay for the Medicaid expansion, the deadweight loss associated with this taxation, and even the direct loss of premium subsidies that accompany eligibility for Medicaid. When we take these offsetting factors into account, the picture changes considerably. Instead of an increase in economic growth and jobs, we find the opposite occurs—billions of dollars of economic activity, and thousands of jobs, are lost. Some states see small net gains, but the total losses incurred in other states substantially exceed the total gains.

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