Editor's note: This posting original appeared in Health Policy Solutions.
Charles Brown is president of Charles Brown Consulting, a public policy and economic consulting firm, and director of Colorado State University's Colorado Futures Center.
When the Colorado Health Foundation commissioned my team to study the economic and budgetary impacts of expanding eligibility for the Medicaid program, we looked at the issue objectively through a dollars-and-cents lens. From a pure economics perspective, we needed to determine how the Colorado economy would be affected by expansion or no expansion.
In conducting the assessment, we used a wide range of data to calculate detailed projections on the costs, savings and economic impacts associated with expanding or not expanding Medicaid through fiscal year 2025-2026.
The results of our analysis, highlighted in the just-released Colorado Health Foundation report, "Medicaid Expansion: Examining the Impact on Colorado's Economy," show that the Colorado economy will grow more with Medicaid expansion than without it. In short, expansion will have a net positive impact on the Colorado economy.
Among the findings:
Colorado will gain 22,388 new jobs by 2026 (including 14,357 in the first 18 months of implementation) if Medicaid eligibility is expanded.
Medicaid expansion would stimulate $4.4 billion in economic activity and increase average annual household earnings by $608 a year by 2026.
Over the period of the analysis, the cumulative costs of Medicaid expansion are less than the costs of no expansion.
Medicaid expansion will reduce the number of uninsured non-elderly Coloradans by 189,000 by 2026.
Economic growth from Medicaid expansion will generate more state tax revenues – an estimated $128 million more by the end of 2026 – without increasing state tax rates. These added revenues, coming from new jobs and other economic drivers, should defray the gradual cost of expansion to the state.
Established in 1965, Medicaid has functioned as a jointly-funded federal and state government health program. Currently, more than 670,000 Colorado citizens are enrolled in Medicaid, with 60 percent being children and 18 percent being the aged or individuals with disabilities. Medicaid expansion would enable Coloradans to qualify for Medicaid coverage provided they fall under 138 percent of the federal poverty level (FPL). The level equates to an annual income of $15,415 for a single individual and $31,809 for a family of four.
Though expanding Medicaid eligibility for those under 138 percent of FPL will have budgetary implications for the state over time, the report makes clear that the economic gains from the expansion will offset those costs.
More details about the economic impact, state budget implications and policy options are available in the report, which makes clear that Medicaid expansion is the right move for Colorado's economy.
Check out this infographic for a visual representation of what expansion would mean for Colorado.