Report: Medicaid cuts would harm Louisianas economy

Hospitals in Louisiana employ more than 99,350 people and contribute $4.4 billion annually in payroll, according to an analysis by the Louisiana Hospital Association (LHA) released Sept. 22. But cuts in Medicaid payment could lead to the loss of approximately 6,764 jobs and $258 million in earnings statewide, according to the report, “Hospitals and the Louisiana Economy, 2011.”

James A. Richardson, PhD, director of the Public Administration Institute at the Louisiana State University, conducted an economic impact analysis for the LHA to measure the economic activity generated by hospitals in the state. According to the report, the healthcare sector in Louisiana employed approximately 269,200 people, or 16.2 percent of the state’s workforce. Overall, hospitals generated more than $27.1 billion annually in economic activity.

“People often do not realize that hospitals are huge contributors to our economy, even during economic recession,” John Matessino, LHA president and CEO, said in a statement. “Every dollar spent by a hospital supports 95 cents of additional business activity, and each hospital job supports approximately 1.4 additional jobs.”

Cuts in Medicaid would negatively impact economic activity in the state, according to the analysis. About 19 percent of net revenues in the state are Medicaid-related, the report found; Medicaid-related expenditures resulted in 47,483 jobs and $1.8 billion in personal earnings.

Richardson pointed out that historically the federal government provides 65 cents for every 35 cents spent by the state on Medicaid. Consequently, a state cut of $150 million in direct expenditures for Medicaid would create an additional loss of $340 million in federal match funds. The effect of the overall loss would be 6,764 fewer jobs statewide, $258 million less in personal earnings and an $800 million reduction in business activity.

The report also included results from a 2011 LHA survey of hospitals. The survey found that 70 percent of hospitals reported a decrease in patient account collections; 41 percent noted a decrease in elective surgeries; and 54 percent saw an increase in emergency room visits by uninsured patients.

Market conditions also forced cost-cutting changes, with 46 percent of respondents saying they froze or reduced capital purchases; 23 percent pulled back on construction, equipment purchases and other projects; 51 percent eliminated vacant positions; 19 percent reduced services; and 15 percent cut community benefit programs. A smaller percentage of respondents said they also were considering cutbacks in each of the categories.

The LHA is a non-profit organization that represents hospitals and healthcare systems in Louisiana. The 44-page report is available here.