Comment: Obamacare is boosting economic health of states

By Matthew A. Winkler / Bloomberg Opinion

Obamacare gave Americans a lot to argue about before it became law in 2010. One contentious question concerned its eventual economic effect, with supporters saying it would invigorate businesses by freeing them from burdensome health-care costs and opponents warning of a drag produced by tax increases and government bureaucracy.

A decade’s worth of data has now rendered a partial verdict: States that have fully embraced the Affordable Care Act are enjoying healthier labor markets and stronger income growth than those that haven’t.

The evidence comes from the experience of the 12 states that have refused to accept a key element of Obamacare: federal money covering the cost of expanding Medicaid to cover millions of people who otherwise couldn’t afford health insurance. The U.S. Supreme Court made the Medicaid expansion optional in its 2012 decision upholding the other parts of the law.

Standard measures of jobs and personal income growth show that even Texas — the biggest of the states still rejecting the Medicaid expansion — trails the states that joined it after turning it down when it became available on Jan. 1, 2014, according to data compiled by Bloomberg.

The Medicaid expansion, enabling more than 4 million of the most vulnerable people to work, turned out to be a catalyst for growth. That may explain why 38 states and the District of Columbia have embraced the insurance extension, up from 25 when it first became available on Jan. 1, 2014.

The Affordable Care Act, signed 12 years ago this week by President Barack Obama, was conceived to let the entire population gain private or public health care with corporate, federal and state revenues that combined would reduce the national burden and invigorate the economy. It allowed children to remain insured on a parent’s policy until age 26, required equal treatment of persons with preexisting medical conditions and prohibited annual or lifetime coverage limits.

By 2020, before the coronavirus pandemic ended the longest period of U.S. growth in modern times, the job market in states initially refusing and subsequently implementing the Medicaid expansion outperformed states opposed to it, according to labor participation data compiled by Bloomberg. Labor participation measures the proportion of people in the working-age population who have jobs or are seeking work. Excluding recent transplants during the pandemic, the trend continues unabated because the covid-19 pandemic weighed heavily on mothers without child care, especially low-wage women, whose recent employment significantly lags behind men.

From April 2020, when the U.S. started to recover from the worst employment collapse since the Great Depression, through Jan. 31 of this year, the number of U.S. jobs grew by 14.3 percent. That’s 1.4 percentage points greater than the average for the 12 states refusing the Medicaid expansion and 0.6 percentage points less than the average for the states accepting it, according to data compiled by Bloomberg.

Texas, which has the nation’s highest proportion of people without health insurance at 18.4 percent, according to the U.S. Census Bureau, underperformed the national average with employment growth of 13.6 percent since April 2020. That’s 1.3 percentage points less than the states adopting the expansion and 5 percentage points less than Massachusetts. The Bay State, which accepted the extension in 2014 and is No. 1 with only 3 percent of its population of almost 7 million uninsured, saw its labor force expand at a rate of 18.3 percent, according to data compiled by Bloomberg.

Even when such populous states as California and New York are excluded from employment calculations, the states expanding Medicaid saw employment increase 14.8 percent, well above Texas and the national average. Among the 12 holdout states, only one-third outperform the national job market while 53 percent of the 38 states (plus Washington, D.C.) adopting Medicaid created more jobs than the national average.

Unemployment shows a similar pattern, with the 12 holdouts seeing their jobless rates decline 8.9 percentage points on average since April 2020, almost a percentage point less than the decline for the other states. The inferior performance is no different when California and New York are omitted from the equation, according to data compiled by Bloomberg.

The 9.93 percent increase in U.S. personal income since April 2020 is 0.33 percentage points more than the gain for states refusing Medicaid expansion, according to data compiled by Bloomberg. Better health care appears to translate into greater wealth for all.

Matthew A. Winkler is co-founder of Bloomberg News (1990) and Editor-in-Chief Emeritus; Bloomberg Opinion Columnist since 2015; co-founder of Bloomberg Business Journalism Diversity Program in 2017.