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Louisiana Proves Expanding Medicaid Is Surefire Economic Development Plan

DevelopIn their bids for governor, Marty Jackley and Kristi Noem are floating all sorts of airy-fairy economic development plans. Billie Sutton responds with a hodgepodge of things he’s voted for and things he promises to do.

Sutton could crush Jackley and Noem by erasing his entire economic development plank and replacing it with one sure-fire economic booster, a plan he’s backed in the past and should back prominently in his campaign: expand Medicaid.

The difference between the status quo slogans Jackley and Noem mouth and the Medicaid expansion we Democrats should advocate is that we have clear evidence that Medicaid expansion drives economic gains. The latest evidence comes from Louisiana:

Louisiana’s decision to expand Medicaid in 2016 led to a $1.85 billion direct economic impact, according to an economic impact report released Tuesday (April 11).

…Gov. John Bel Edwards touted the findings in the report that highlighted how Medicaid expansion in Louisiana helped the state save $317 million and create 19,000 new jobs [Maria Clark, “Medicaid Expansion Created 19,000 New Jobs in Louisiana, According to Study,” New Orleans Times-Picayune, 2018.04.10].

Economic gains from Medicaid expansion in Louisiana FY2017, LSU, March 2018
LSU, March 2018.

$1.85 billion in economic activity, $317 million in state budget savings, and 19,000 jobs, from one policy change, in one fiscal year.

The same thing happened in Montana, where Medicaid expansion paid for itself.

The same thing happened, according to research cited in the LSU report, in Michigan, Arkansas, Colorado, and Pennsylvania.That’s why nobody regrets expanding Medicaid.

How Medicaid expansion helps the economy isn’t airy-fairy; it’s simple economic stimulus:

This analysis of Medicaid expansion in Louisiana focuses on the economic impact from a state’s perspective, not from a national perspective. This diagram of the flow of federal Medicaid dollars through the local economies illustrates the fact that the federal dollars are net new dollars coming to the state that, otherwise, would not. These dollars initiate payments to the healthcare sector which in turn initiate payments to vendors providing commodities and services to the healthcare providers and payments to employees of the healthcare providers and payments to employees of the vendors. This spending by the healthcare providers lead to a second and third round of spending by its employees and the healthcare vendors and providers of healthcare services. The impact of the net new dollars from the federal government has a large impact on the healthcare community and its vendors and employees but also has an impact on grocery stores, service stations, personal and business services, and state and local governments. These jobs, wages and earnings, and state and local tax receipts would not exist if the federal dollars had not been introduced into the state’s economy. And, the federal dollars would not be forthcoming if the state had not adopted the Medicaid expansion program [emphasis in original; James A. Richardson, Jared J. Llorens, and Roy L. Heidelberg, “Medicaid Expansion and the Louisiana Economy,” LSU E.J. Ourso College of Business: Public Administration Institute for Louisiana Department of Health, March 2018, p. 17].

Louisiana’s population is about 5.4 times that of South Dakota. So go ahead, assume the economic impacts of Medicaid expansion are 5.4 times larger in Louisiana than in South Dakota. If we got off our Obama-grudging duffs and took the ACA deal, maybe we’d see “only” $340 million in economic impact, $59 million in state budget savings, and 3,600 more jobs. Those numbers are empirically firmer than anything in any of our current gubernatorial candidates’ proposals. (Seriously, Kristi: exactly how many jobs will you create by “employ[ing] pro-active people within the Governor’s Office of Economic Development” and “instilling a culture of customer service”?)

Oh yeah, and 59,000 more South Dakotans get affordable health coverage.

Thousands more jobs, tens of millions of dollars in state budget savings, hundreds of millions of dollars in increased economic activity—good grief, Democrats! The data from Medicaid-expansion states writes our entire campaign platform. Take care of people, the budget, and the economy all in one one-sentence policy. Expand Medicaid, and everybody wins (except maybe Marty and Kristi)!


  1. Debbie 2018-04-11 18:54

    All those pretty numbers are from when the Feds paid 100% – They no longer do.
    You fail to mention that the states you cite held special sessions this year because the had to make hundreds of millions of dollars in budget cuts.
    So when you use the word economics you play a fuzzy game of deception- Yes the economy for the some of the hospitals may have gone up but yeah but with all the money that states give away in subsidies it doesn’t do squat for the 90%.
    The states you cite already have a strong support for local development, South Dakota drains it’s economy by using public money to fund out of state venture capitalists .

    It did not keep hospitals open as hospitals in Montana and other states closed in 2017.

  2. OldSarg 2018-04-11 20:30

    But it is not “growth”. It is just more in government money paid for by the other tax payers. You are only robbing Peter to pay Paul. It isn’t economic growth. It is government dependency. If you build, carve, grow or make something and sell it that is growth. If you “qualify” for more government money by taking it from other Americans it IS NOT growth. It is leeching. . .

  3. Debbo 2018-04-11 20:47

    “payments to the healthcare sector which in turn initiate payments to vendors providing commodities and services to the healthcare providers and payments to employees of the healthcare providers and payments to employees of the vendors.”

    I think I see the problem for the SDGOP. No where does it say any of those payments go to corrupt republicans, the only kind SD has.

  4. Clyde 2018-04-11 22:12

    I’m simply amazed that the SDGOP has been so quick to jump on this horse of refusing support for medicaid. I have never personally met a republican that wasn’t quick to grab every cent of federal money they could. Just look at South Dakota roads. Not a scoop of asphalt gets tossed unless the federal government is sending a check. Right now they are putting in needless “safety” junctions because there is federal money for it. Of course it all involved “Obama care”.

    I”m afraid Sutton is doing the same thing that the Dem’s are doing nationally. Afraid to make waves and more than willing to go along with near right.

  5. leslie 2018-04-11 22:57

    1. trump announces he’ll be firing missiles at Syria and warns Russia to get outta the way/Russia says they’ll track down where the missles come from
    2. trump’s lawyer raided for documents
    3. “kid” ryan quitting the house and speakership
    4. SD still doesn’t expand medicaid

  6. Cory Allen Heidelberger Post author | 2018-04-13 16:58

    OldSarg, that money’s going to transfer somewhere. If South Dakota doesn’t take it, the feds send it somewhere else. It makes no sense to turn it down.

    Every dollar we take for Medicaid, roads, education, what have you, would fall under the same critique OS offers. Not taking that money at all would not somehow magically restore the national economy. It would lead to a collapse of basic services and infrastructure in South Dakota.

  7. Cory Allen Heidelberger Post author | 2018-04-13 16:59

    Review the data, Debbie. The data I’ve seen show that Medicaid expansion comes out an economic plus for states even at the 90% federal payment rate. Show us otherwise.

  8. OldSarg 2018-04-13 18:18

    Cory, the government needs to STOP this frivolous spending. It is not your money. It is not their money. It is the people’s money and YES, if the money remained in the hands fo those who earned it they would spend it on goods and services. Those purchases will, in turn, employ others, allow a farmer to plant more, pay for the education on a child, help a new business get started and feed a family.

    Cory, I am not saying the government has no place, nor am I anti-government. The problem is you are a government employee and you know of nothing else. I understand. I know a lot of people like you that have never had that drive of independence and would rather remain a serf of the “Man.

  9. Debbie 2018-04-14 13:25

    What does the numbers of Montana or Louisiana have to do with South Dakota- An economic statement is an overlay of several factors- South Dakota economics is way different in computation than the states you cite.
    Your statement about medicaid expanding the economy makes no sense unless you understand what exactly needs to be in place and what expands…………..
    What you are trying to convince me of is that if the state takes medicaid then the invisible hand of God comes down and rains money on the state. Sorry but yeah, if that were true then we could get the State contracted non profit workers off welfare.

  10. Cory Allen Heidelberger Post author | 2018-04-15 12:19

    The numbers from any state expanding Medicaid are the best empirical data we have on the impacts of the policy. To say that I can’t look at multiple states engaged in the same policy and draw conclusions about the effects that policy has on state economies is paralyzing and ludicrous, just an excuse to sit around and cling to your prejudices without dealing with actual evidence.

    It’s not the invisible hand of God. It’s not magic. It’s a tub of federal money pouring into state economies, helping state budgets, buying more goods, and creating more jobs.

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