The
Coalition to Save Medicaid
Health care is one
of the three largest industries
in New Mexico and
drives our economy in very productive ways:
▪ In 2002
approximately 71,000 jobs in New Mexico were in healthcare (that’s 9% of all
non-agricultural jobs). The vast majority (79%) of these jobs were in the
private sector.
▪ In a one year period (2001-
2002) health care employment grew by 2,400 jobs. This growth rate (of 4.3%) was
significantly larger than the (2.8%) growth rate of the service sector as a
whole, and the (.8%) growth rate of all non-agricultural employment.
Health care is one of the fastest growing sector's in New Mexico's economy.
Health care job growth has boosted the New Mexico economy during the downturn
that began in 2001.
Health care
creates many desirable jobs,
with higher-than-average wages.
▪ In 2001 the average weekly
wage for health care jobs in New Mexico was $621 – 13% higher than the state’s
average weekly wage for all industries (NM Department of Labor, 2002).
Federal funding of NM Medicaid, alone, supports over 28,000 jobs.
▪ The state’s Economic
Development Department recently decided not to support the location of
additional call centers in the state because they create low-wage jobs. As a
matter of state policy, we should support the development of higher-wage jobs
that can help families move towards self-sufficiency – exactly the types of
jobs that the Medicaid program creates.
Not only does health care create more
jobs, it creates better ones.
28,000 jobs are supported through federal
funding of Medicaid—jobs
that pay significantly above New Mexico's average wage.
Medicaid federal matching funds
generate tremendous
economic activity in New Mexico:
Economic
Impact of New Mexico’s Medicaid Spending
|
FY 2002
State Investment |
Federal
Match |
Economic Activity
Multiplier |
Annual Economic
Activity Generated |
Jobs Created |
Compensation Paid |
|
$348
Million |
$1.39
Billion |
$5.68 |
$1.98 Billion |
28,327 |
$830 Million |
▪
In 2002, the federal matching funds generated almost $830 million in wages and
salaries for New Mexicans.
▪ For an investment of $348
million by the state, federal spending on New Mexico Medicaid generated over
$2 billion in economic activity, as measured in the value of goods and
services produced. Each dollar New Mexico spent on Medicaid drew down $4 in
federal Medicaid funds.
▪ When these dollars pump
through the state’s economy, they generate an additional $1.68 in economic
activity. So, when the state invests one dollar, we receive back a combined
“multiplier” effect of $5.68.
Health care is
particularly valuable to rural economic development.
▪ The local hospital is the
economic backbone of many rural communities. In some, it is the largest
employer, and one of the few sources of high-paying jobs.
▪ Health service providers in
rural communities are especially reliant on publicly-financed health
insurance. Medicare and Medicaid payments account for almost 80% of revenues
for rural hospitals.
▪ Medicaid is the primary source
of funding for 36% of hospital admissions in McKinley county, and 48% in
Hidalgo county, according to the NM Health Policy Commission, 2001. Many
healthcare providers, especially rural pediatricians and obstetricians
(Medicaid pays for 56% of all births in New Mexico) would have few, if any,
patients without Medicaid.
▪ If Medicaid funding is reduced
many of New Mexico’s rural communities would be at risk of losing their health
care infrastructure (because too few residents could afford to pay the full
cost of medical care, or to purchase private insurance). Without a functional
health care system, rural communities will have an even harder time attracting
new businesses to locate and stay there.
In New Mexico, approximately 50% of rural residents do not have private health
insurance.
Only 28% of admissions to rural hospitals in 2000 were paid for by private
insurance.
Reducing New
Mexico’s investment in Medicaid will not save the state money.
Cost: Every $1 million
cut in state Medicaid spending would cost New Mexico 80 jobs, and $2.4 million
in lost wages and salaries. To maintain current levels of service, the state
must invest an additional $100 million.
Cost: Lost tax revenues,
reduced consumer spending and increased demand on social services and income
supplement programs (such as Food Stamps, TANF, and Unemployment Insurance)
increases the cost to the state budget of a reduced investment in Medicaid.
Cost: Increased
costs to hospitals for uncompensated care; to counties through increased
demand on county indigent funds; to privately-insured individuals in increased
premiums; and to everyone through reduced services and/or increased cost of
health care services.
Reducing the state's investment in Medicaid may, at first glance, seem to be
the quickest route to savings. A closer look, however, reveals that
apparent savings are severely offset by additional costs.
When Medicaid costs are reduced, public and private costs increase.
Medicaid helps
to contain the price of healthcare, while also expanding access to care
among the privately insured.
▪ Many of the higher-wage jobs
created by Medicaid provide employees, and often the employee’s family,
employer-subsidized health insurance.
▪ Medicaid helps to contain the
price of health care, and the cost of private health insurance, by reducing
the extent to which health care for low-income people must be subsidized.
It is estimated that over 35,00 New Mexicans are privately insured because
they, or a family member, are employed at a job that would not exist without
federal funding of Medicaid.
The public and
private sectors in New Mexico are economically linked.
▪ The health care providers
serving Medicaid recipients also provide most of our privately-insured health
services and serve privately-insured individuals. When the reimbursement rate
to providers is reduced, or when Medicaid-funded services are further limited,
or Medicaid eligibility is restricted so that more people are uninsured (and
utilizing emergency rooms), the cost of providing care goes up for everyone.
Hospitals are forced to provide more “uncompensated” (i.e., not paid for by
the patient or by insurance) care.
▪ Providers will seek to recoup
these losses by raising the cost of the health insurance and/or services they
provide on the private side of their operations. Providers unable to recoup
these losses by absorbing the additional cost of uncompensated care, and/or by
raising prices, may be forced to reduce services (as they lose doctors and
nurses), or to close.
A
reduced investment of state dollars in Medicaid will result in increased costs
for the private sector, including the business community and privately-insured
individuals.
Invest in
Medicaid: the Highest Yield Economic Development Strategy Available
There is literally no other economic
investment currently available to New Mexico that guarantees the kind of
return on investment that Medicaid guarantees: for $100 million invested, the
state receives a guaranteed return of over $300 million PLUS significant
economic multipliers.