Positive Economic Effects from Louisiana’s Medicaid Expansion Provides Example for Southern States

A new report produced by Louisiana State University shows Louisiana’s decision to expand Medicaid to non-elderly adults below 138%of Federal Poverty Level (FPL) has resulted in millions in net revenue for the state. Using an economic impact analysis from the Kaiser Family Foundation, the study finds the Medicaid expansion created 19,195 jobs and $177.8 million in state and local tax receipts.

The federal dollars coming in from Medicaid expansion and the enhanced federal match rate provided Louisiana’s economy a healthy boost. In the state fiscal year 2017, Louisiana received $1.85 billion in federal dollars for inpatient hospital care, pharmacy, physicians, and other services.

What I find most striking was the number of jobs created in Louisiana as a result of the Medicaid expansion. Of the almost 19,200 jobs created as part of the economic impact, only 50%are in the healthcare sector; the others are in various sectors like trade and personal services distributed across districts in the state.

Other states like Arkansas, Pennsylvania, and Montana have evaluated the impact of the Medicaid expansion using the KFF model, all with positive economic results. The analysis for Pennsylvania found the expansion resulted in an increase of 15,500 jobs while personal income in Montana increased by a total of $280 million.

Several of Louisiana’s neighboring states have chosen not to expand their Medicaid programs, namely, Alabama and Mississippi. Alabama and Mississippi have similar economic and demographic characteristics to Louisiana based on the Census Bureau’s American Community Survey. Alabama, Mississippi, and Louisiana have median incomes between $11,000-$15,000 below the national average and over one-third of their state populations live below 200 percent of the federal poverty level. In Alabama, Mississippi, and Louisiana, there is also a larger share of the population that is African American than the national average.

Medicaid is a program designed to provide low-income individuals with health insurance coverage. The failure to expand Medicaid eligibility has left 75,000 and 99,000 non-elderly, low-income adults in Alabama and Mississippi respectively, in the coverage gap. Of those in the coverage gap in these states, almost 50 percent of the adults are people of color.

With the similar demographic characteristics and fiscal environments among the states, Alabama and Mississippi would likely also see beneficial economic effects in their states if they were to expand Medicaid.


Allexa Gardner
Allexa Gardner is the Research Associate at the Georgetown University McCourt School of Public Policy’s Center for Children and Families.