Medicaid expansion expected to boost state employment
September 19, 2015 10:15 PM
Gov. Tom Wolf implemented the Medicaid expansion this year under the federal Affordable Care Act, replacing a Medicaid alternative, Healthy PA, that former Gov. Tom Corbett had put in place.
By Adam Smeltz / Pittsburgh Post-Gazette
Pennsylvania’s Medicaid expansion should lead to more than 35,000 new jobs statewide over the next several years, fueled by a $15 billion infusion of federal money to support the public health insurance, analysts predict.
But the employment boost could split unevenly across health care, where cash-strapped hospitals and clinics may see only slight staff growth from the expansion, trade groups warn. They forecast bigger job gains for medical supply companies, device makers and other vendors that underpin the sector.
“Doctors in many cases don’t make a profit from a Medicaid patient. You hate to put it in those terms. But in a small business, you have to make a profit to stay in business,” said Dennis Olmstead, chief strategy officer at the Pennsylvania Medical Society in Harrisburg. The society represents about 20,000 physicians and medical students across the state.
PG graphic: The States and Medicaid Expansion (Click image for larger version)
Gov. Tom Wolf implemented the Medicaid expansion this year under the federal Affordable Care Act, replacing a Medicaid alternative, Healthy PA, that former Gov. Tom Corbett had put in place. The expansion extends traditional Medicaid eligibility to residents ages 19 to 64 with incomes up to 138 percent of the poverty level, or around $34,000 for a family of four.
The assistance program often reimburses care providers about 70 percent to 80 percent of their actual costs, which makes it difficult for hospitals and clinics to hire more workers based solely on the expansion, industry organizations said.
At the same time, the groups expect the number of newly insured families on Medicaid to buoy sales of medical transportation services, walkers and other health-related products. The coverage will allow many Pennsylvanians to spend less out of pocket on medical expenses, a shift that should encourage more broad-based job growth across the economy, said health care management professor Dan Polsky.
“For some of them, they were spending money for health care that could have gone to their other needs, like paying their electricity bill or for food. These are low-income people with tight spending,” said Mr. Polsky, executive director at the Leonard Davis Institute of Health Economics at the University of Pennsylvania.
He said the expansion could slash personal bankruptcy rates stemming from uncovered medical bills and help pull more people out of poverty. About 10 percent of Medicaid enrollees in a 2014 survey had trouble paying medical bills, less than a third the rate among uninsured people, according to the Commonwealth Fund.
“Having access to Medicaid allows people who are sick — or who have fallen on hard times — to focus on getting well and getting back on their feet rather than worrying about being crushed beneath the weight of huge expenses,” said Erin Ninehouser, policy director at the nonprofit Pennsylvania Health Access Network.
Up to 600,000 Pennsylvanians qualify for coverage under the program expansion, more than 430,000 of whom have signed up for medical assistance since the predecessor Healthy PA began in December. The switch to expansion under Medicaid, branded HealthChoices, finished by early September.
A Rand Corporation analysis projects the boom will bring $2.5 billion a year in extra federal money to Pennsylvania, where annual Medicaid costs ran around $23 billion for the 2.2 million adults and children covered under past guidelines. Pennsylvania will help pay for the expansion starting in 2017, eventually covering 10 percent of that cost.
Although the Rand report suggests the bump will sustain more than 35,000 jobs, analysts said it’s too soon to know when the money will start influencing the job market. The state Department of Labor and Industry has no estimates but expects overall health care and social assistance jobs to increase by 13,000 a year over the next decade.
Meanwhile, new Medicaid enrollees may need some time to navigate their coverage and strike up new relationships with doctors, said Andy Carter, CEO at the Hospital and Healthsystem Association of Pennsylvania.
“While the hospital community expects that more individuals will continue to secure health coverage through Medicaid expansion, it also recognizes that unpaid hospital bills will never disappear,” Mr. Carter said in a statement. He said hospitals in the state supplied more than $1 billion in uncompensated care last year, up 57 percent over seven years.
Hospital systems expect the expansion will chip away at that charity care by cutting the number of uninsured. Dwindling margins forced Western Pennsylvania hospitals to shed about 1,600 full-time equivalents in the past year, but more reimbursements under Medicaid may allow some modest hiring, according to the Healthcare Council of Western Pennsylvania.
Some workers may shift into outpatient services, where many new Medicaid enrollees are receiving care, the council reported.
“This isn’t going to bring a windfall for hospitals,” said Jane Montgomery, the council vice president for clinical services and quality. “Medicaid does not pay us well — period.”
Adam Smeltz: email@example.com, 412-263-2625 or on Twitter @asmeltz.
To report inappropriate comments, abuse and/or repeat offenders, please send an email to
firstname.lastname@example.org and include a link to the article and a copy of the comment. Your report will be reviewed in a timely manner.