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Study Suggests Obamacare Medicaid Expansion Would Cut Ohio’s Workforce

Working paper adds new evidence states should not expand Medicaid

The Obamacare Medicaid expansion could reduce nationwide employment by up to 940,000, a National Bureau of Economic Research (NBER) working paper released this month estimated. If every state implemented the expansion sought by Ohio Governor John Kasich, as many as 4.2 million Americans would be pushed from private health insurance into Medicaid.

Working paper authors Craig Garthwaite of Northwestern University, Tal Gross of Columbia University, and Matthew J. Notowidigdo of the University of Chicago reached their conclusions by reviewing workforce and insurance data following a 2005 cut to Medicaid eligibility in Tennessee.

“One must exercise considerable caution when directly applying our results to [Obamacare], but our results appear to indicate that the soon-to-be-enacted health care reform may cause substantial declines in aggregate employment,” the authors wrote.

After tens of thousands of childless Tennessee adults lost their public health insurance, “Tennessee experienced a sudden employment increase that the rest of the south did not experience.”

This change was “driven by a sudden break in trend for childless residents of Tennessee after the TennCare disenrollment,” the NBER paper explained.

As Greg Lawson at The Buckeye Institute noted on June 11, almost 90 percent of the Ohioans who would fall under the Obamacare Medicaid expansion would be adults with no dependent children, according to a study from the left-leaning Urban Institute.

“By contrast, Tennessee residents with children did not experience such a change,” the NBER paper continued. “Moreover, we do not see a similar pattern in other Southern states for either group of adults.”

Ultimately, the researchers concluded “the TennCare disenrollment resulted in an approximately 6 percent increase in employment over the following two years.”

“Given the details of the reform, we interpret the increase in employment to be a change in labor supply rather than labor demand.”

In other words, Tennessee residents losing their Medicaid coverage responded to a new incentive to look for work.

“In Tennessee, Google searches for ‘job openings’ rose sharply in July 2005 and peaked in August of 2005, when the TennCare disenrollment began,” the NBER paper noted. “There is no similar change in search behavior among residents of other Southern states.”

“Disenrollees who wanted to remain insured may have found that securing employment was the only way to do so. This mechanism for labor supply changes is further supported by the concentration in employment increases for individuals working more than 20 hours a week.”

As a result, “In 2006, the share of Tennessee residents reporting private coverage sharply increased. By contrast, there was no change in the share of residents of other Southern states reporting private coverage.”

The authors also reviewed Social Security Disability Insurance (SSDI) application data and concluded that “reductions in the generosity of Medicaid may in turn decrease the attractiveness of SSDI for some individuals.”

Other studies have shown that Medicaid expansion – enacted at great cost with the promise of covering the uninsured – simply reduces the percentage of a state’s population with private health insurance and makes more residents dependent on the government.

The Foundation for Government Accountability (FGA) has demonstrated this time and again.

FGA President Tarren Bragdon shared this information during a public Ohio House hearing on March 11, and a June 12 FGA report published with Opportunity Ohio included much of the same data.

Reality has not prevented Gov. Kasich, a Republican, from pressuring legislators into backing the Obamacare Medicaid expansion using the same talking points progressives have been repeating for years.

“I think it’s unbelievable that we live in America, and there are people that have no health insurance,” Kasich told a July 9 socialized medicine rally at the Statehouse.

“As Americans, we need to beat back this notion that if somebody’s poor, somehow they’re lazy,” Kasich added. “That if they’re poor, they have to lift themselves by the bootstraps.”

FGA research of Medicaid expansions in multiple states and now an NBER study of Tennessee data show that the Obamacare Medicaid expansion is unlikely to result in a greater percentage of Ohioans having health insurance, but could devastate Ohio’s economy by reducing incentives to work.

Assurances from Gov. Kasich that the Obama Administration will give Ohio flexibility to enforce work requirements or back out in the future are hardly worth addressing, given the Obama Administration’s willingness to rewrite the law for political ends.

And that’s all assuming Ohioans and federal taxpayers can afford it.

This story originally appeared at Media Trackers Ohio.

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