Expanding Medicaid in States under the American Rescue Plan Would Add More Than 1 Million Jobs, Study Shows

States’ economies would grow by $350 billion by 2025 if all 14 holdout states expand Medicaid, according to a new report authored by a Milken Institute SPH researcher.

May 27, 2021

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Texas, Florida, North Carolina, Georgia and Missouri would experience the largest economic gains by expanding Medicaid eligibility, the report finds.

Expanding Medicaid eligibility under the American Rescue Plan (ARP) in the 14 states that have done so would lead to the creation of more than 1 million jobs nationwide, according to a new report from researchers at the George Washington University Milken Institute School of Public Health and the Commonwealth Fund, a nonprofit foundation that supports independent research on health policy reform.

Texas, Florida, North Carolina, Georgia and Missouri would experience the largest economic gains by expanding Medicaid eligibility, the report finds. 

The ARP increases federal funding for states that adopt the Affordable Care Act’s (ACA) Medicaid expansion by paying 90% of the cost of covering newly-eligible adults, with an additional five-percentage-point “bonus” federal match on existing state Medicaid expenditures for two years.

As of May 2021, 14 states—Alabama, Florida, Georgia, Kansas, Mississippi, Missouri, North Carolina, Oklahoma, South Carolina, South Dakota, Tennessee, Texas, Wisconsin, and Wyoming—still have not expanded the program. Missouri and Oklahoma have passed ballot initiatives to begin expansions, but it is unclear whether Missouri will move forward.

The report, “The Economic and Employment Effects of Medicaid Expansions Under the American Rescue Plan,” estimates the health, economic and employment gains from 2022 through 2025 for all 14 states—and the nation overall—if they adopt Medicaid expansions. 

“This study shows that with the additional federal support in the American Rescue Plan, Medicaid expansion in the remaining 14 states could revive state economies and create more than 1 million new jobs, in addition to helping millions of low-income Americans gain health insurance,” said Leighton Ku, director of the Center for Health Policy Research at the Milken Institute SPH and lead author of the report. “The economic and social benefits of Medicaid expansion are immense and would ripple through the broader U.S. economy.”

Key findings include: 

  • Job Growth: Expanding Medicaid in the 14 states would produce more than 1 million new jobs in 2022. While much of the national employment growth would be in health care, more than half (56%) would occur in other sectors such as construction, retail, finance, insurance and other industries. Across the 14 states, employment would rise by 837,000 jobs in 2022, including 299,000 in Texas, 135,000 in Florida, 83,000 in North Carolina, 64,000 in Georgia, and 50,000 in Missouri. An additional 209,000 jobs would be created across the country as economic activity ripples through other states.

  • Health Insurance Gains: Medicaid expansion in all 14 states would lead to 4.45 million fewer people uninsured and an increase in Medicaid program enrollment by 6.69 million in 2022. The top five increases in Medicaid enrollment would be in Texas (1.75 million), Florida (1.38 million), Georgia (680,000), North Carolina (620,000) and Missouri (400,000). The federal government would cover almost all of the new health care costs.

  • Higher State and Local Tax Revenues: Expanding Medicaid would increase federal revenue to the 14 states by $49 billion in 2022 and lead to higher state and local tax revenues. This is because the additional federal Medicaid revenue stimulates economic activity and ultimately leads to higher state and local tax revenue. In 2022 alone, the ARP five-percentage-point bonus federal match on existing state Medicaid spending would equal $8.5 billion for the 14 states, coupled with the additional $43.8 billion in federal matching funds that the states would earn for covering newly eligible adults under Medicaid expansion.

  • Stronger State Economies: Medicaid expansion would fuel stronger state economies because of the inflow of federal funding. If the 14 states expand Medicaid, over the years 2022 to 2025 total economic activity would grow by more than $600 billion and personal incomes would grow by $218 billion in these states.

David Blumenthal, president of the Commonwealth Fund, said states that opt not to expand Medicaid are leaving millions of the poorest people in the country without access to affordable health insurance.

“The American Rescue Plan is a fresh opportunity not only to finally extend coverage to more than 4 million people, but to promote job and economic growth in the wake of one of the deepest recessions in generations,” he said.