Op-Ed

Why Medicaid expansion won’t boost N.C. jobs

Last week, yet another study claiming that expanding Medicaid in North Carolina would create tens of thousands of jobs was released and dutifully reported by the media. The findings of such studies, however, are based upon a fatally flawed assumption that Medicaid coverage equates to access to medical care.

The latest report, produced by George Washington University researchers, declares that North Carolina will miss out on 43,000 jobs in the next five years, along with $21 billion in federal money, if it continues to refuse Medicaid expansion as prescribed in Obamacare. The study’s findings largely echo other recent reports, such as a January study produced by the North Carolina Institute of Medicine that came to similar conclusions.

The job growth claims are based on the state’s “drawing down” additional federal funds due to Medicaid expansion. As the GWU report describes, “Since most of the cost of a Medicaid expansion would be borne by the federal government, expansion would result in billions of dollars in additional federal funding flowing into North Carolina. These funds will initially be paid to health care providers, such as hospitals, clinics or pharmacies, as health care payments for Medicaid services.”

This income received by health care providers is then spent on suppliers (such as medicine, medical supplies) and in their community on goods and services such as groceries, clothes and movies.

The fatal flaw in this methodology, however, is that in order to “draw down” federal Medicaid dollars, actual medical services need to be provided to Medicaid patients. It is only when doctors actually treat Medicaid patients that the federal government pays those providers for the services.

For instance, the NCIOM study assumes that more than 500,000 North Carolinians will not only enroll in Medicaid under expansion, but each would receive on average roughly $4,300 in medical services each year. As these services are rendered, the doctors and hospitals are paid by the federal Medicaid program, which injects the money into the state’s economy and spurs the job creation, according to the studies.

But here’s where the studies’ jobs claims fall apart: North Carolina already suffers from a shortage of doctors.

According to federal guidelines, 78 counties in North Carolina qualify as Health Professional Shortage Areas because of shortages of primary medical care doctors. And the problem is getting worse. According to the Sheps Center for Health Services Research at UNC-Chapel Hill, North Carolina’s supply of primary care physicians is dwindling, dropping from 9.4 per 10,000 people in 2010 to 7.9 doctors per 10,000 people in 2011.


Indeed, a 2011 survey by the Association of American Medical Colleges found that only 15 states have fewer primary care physicians per capita than North Carolina. The doctor shortage is especially pronounced in the state’s rural areas, where there is a greater concentration of Medicaid enrollees as a share of the population.

And more to the point, not only is there a general doctor shortage in North Carolina, there is a shortage of doctors accepting Medicaid patients.

Medicaid rolls in North Carolina have ballooned from about 1 million in 2003 to roughly 1.7 million today. Adding another 500,000 would push the program over 2 million enrollees and mark more than a million new Medicaid patients in a dozen years.

All this would take place when the number of physicians accepting Medicaid patients is dwindling.

Imagine adding since 2003 the equivalent of the entire population of Wake County to a group of people fighting over a shrinking pool of doctors. Making matters worse, a 2012 article in Health Affairs found that one-fourth of North Carolina’s physicians will not take any new Medicaid patients.

In short, there simply is not nearly enough doctors to meet the demand, and things could get worse.

As reported recently by WRAL, “A survey this year by The Physicians Foundation found that 81 percent of doctors describe themselves as either over-extended or at full capacity, and 44 percent said they planned to cut back on the number of patients they see, retire, work part-time or close their practice to new patients.”

Such extreme supply constraints tells us that if North Carolina were to expand Medicaid, the newly enrolled would have great difficulty actually seeing a doctor. Coverage will not equal access.

If new enrollees in the already overcrowded Medicaid program don’t have access to care, then there won’t be any services provided. With no services provided, no federal dollars are “drawn down” to Medicaid providers. The whole premise behind the studies purporting to show job creation is unsupportable.

Brian Balfour is policy director of the Civitas Institute in Raleigh.

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