Medicaid cuts to Florida hospitals would harm local economies
Proposed cuts in Medicaid spending at Florida hospitals would hurt struggling local economies, costing thousands of high-wage jobs and hundreds of millions of dollars in related economic activity annually, according to a University of Florida study released last week by the Florida Hospital Association.
The University of Florida study identified 233,586 direct employees of hospitals, creating full time and part-time employment impacts of 659,240 jobs in the state.
Hospital and business groups said much of the higher unemployment and reduced economic activity caused by state healthcare cuts could be avoided by raising recurring revenue from a new user fee of $1 a pack on tobacco products. That increase would by itself raise nearly $1 billion annually to fund healthcare in Florida, the study indicated.
“Florida’s hospitals are some of the largest employers in their communities, and deep cuts will have an impact that reaches far beyond the hospital grounds,” said Bruce Rueben, president of the Florida Hospital Association. “Our state’s leaders should consider the short-term and long-term consequences of slashing budgets. We hope the Legislature will give full consideration to reasonable alternatives like raising user fees on tobacco products.”
The UF study found that a hypothetical $100 million reduction in Medicaid funding to Florida hospitals would reduce employment in the Florida economy by 2,187 jobs, reduce output by $258 million and reduce value added by $157 million – or $415 million in total economic impacts.
“Our state has world-renowned hospitals that provide thousands of high paying jobs for Floridians,” said Mark Wilson, president and CEO of the Florida Chamber of Commerce. “Florida’s life sciences industry cluster, especially the healthcare sector, will play a significant role in our transition to the next economy and now is not the time to cut hospital funding.”
According to the study, the 10 Florida counties with the largest share of hospital jobs are, in order, Miami-Dade, Broward, Orange, Hillsborough, Duval, Pinellas, Palm Beach, Alachua, Polk and Brevard.
Across the state, unemployment has been on a steady climb, driven by huge losses in construction jobs. The seasonally adjusted unemployment rate in Florida for February 2009 was 9.4 percent, the highest rate since 1976, according to the Agency for Workforce Innovation.
Local hospitals typically absorb much of the healthcare costs of under-insured and uninsured patients who come in for treatment, because Medicaid reimburses them at rates less than the cost of providing the care and Florida has the fourth highest uninsured rate in the nation.
Because hospitals must treat these patients, added reductions in Medicaid funding would likely impact spending in other areas. Last year, hospitals provided more than $2.5 billion in free care on a cost basis to Florida’s uninsured.
The Florida Legislature is trying to overcome a budget shortfall of several billion dollars during the annual Legislative session, scheduled to conclude May 1. Hospitals are facing across-the-board cuts in the amounts they are paid by governments to provide care for Medicaid patients.
The study, conducted by economists Alan W. Hodges and Mohammad Rahmani of the UF Food & Resource Economics Department, looked at the multiplier economic effects of hospitals in direct spending and impacts on all other sectors of the economy.
While Florida hospitals directly employ 233,586 full-time equivalent employees, their total direct and indirect employment impacts were estimated at about 659,240 fulltime and part-time jobs. The total statewide economic contributions of Florida hospitals in 2007 added up to nearly $170 billion, according to the study.
The UF analysis looked at the total economic impacts of cuts – including output or revenue and value-added impacts such as wages, salaries and benefits, business profits, property income, capital consumption and indirect business taxes (property, sales, excise and motor fuels, but excluding income taxes).
The analysis included the direct economic contributions of activity in the hospital sector, and indirect and induced multiplier effects such as purchases through the vendor supply chain and employee household and government spending outside the hospital sector.
Total output, value added, labor income and indirect business tax impacts across regions and counties were roughly proportional to these employment impacts.
