New report shows 'Medicaid effect' on Pierce County

Medicaid spending is responsible for creating over 6,000 jobs and over $300 million in economic activity in Pierce County, according to a new report released last week by Washington Citizen Action and the Northwest Federation of Community Organizations.

Health care providers and Medicaid recipients trumpeted the importance of Medicaid, both as a source of health care and an economic boost to the county, and called upon the state to keep Medicaid strong.

“This is the first time we’ve been able to show the broad impacts of Medicaid – not only to recipients and health care providers, but the entire county. Investing in Medicaid means investing in Pierce County,” said Victoria Doyle, Tacoma resident and Washington Citizen Action board member.

Washington Citizen Action released new data showing the dramatic contribution Medicaid makes to county business activity, jobs, wages and profits. State spending on Medicaid results in about three times the size of the original investment, because state Medicaid spending is matched almost dollar-for-dollar by federal matching funds, and because of a ripple effect – what Doyle called “the Medicaid effect” – as the spending moves through the local economy.

The economic impact analysis was performed by economist David Holland, a professor in the Department of Agricultural and Resource Economics at Washington State University. The analysis for Pierce County found that Medical Assistance Administration (MAA) spending alone – approximately 60 percent of the total Medicaid budget – results in $488 million dollars in total expenditures for Pierce County, in addition to generating $301 million in income, and at least 6,038 jobs for county residents. State MAA expenditures in Pierce County result in total county expenditures approximately three times the size of the original investment because every state dollar is matched by approximately one federal dollar, and because this spending stimulates additional economic activity.

“We’re talking about effects that ripple through the whole county economy,” said Dana Warn, report author. “For example, when a health clinic orders medical supplies through Medicaid, the business that transports those supplies and the companies that produce the raw materials for those supplies receive indirect benefits. And when employees of those businesses use their wages to buy groceries, they help support employees of local stores, through what economists call induced impacts. Medicaid creates crucial cycles of economic activity.”

Participants at the event noted that because of a recent temporary increase in the federal matching rate (called FMAP) for Medicaid, Washington will draw in about $200 million of increased federal funding simply by maintaining current state spending on Medicaid. Washington Citizen Action worked hard to pass this temporary increase and wants to see the funds strengthen the state’s Medicaid program, and not be used to divert funds.

“This report shows that Medicaid is a good investment and an important source of economic activity for this county,” said Ovidio Penalvar, MD.
Medicaid provides crucial services to 19 percent of Pierce County residents over the course of a year, greatly improving the quality of life for county residents.

“I know how important Medicaid can be for those who need it,” said Washington Citizen Action member Veronica Langely, who has relied on Medicaid since a head injury in 1992. “Medicaid has been a lifeline for me, so that I can get the treatment and medications I need.”