Linda Gorman from the Independence Institute (where I work), in a recent posting on John Goodman’s Health Policy Blog, highlights a myth from the advocacy group Families USA being cited as facts in the current health care policy debate:
Medicaid spending, the group says, creates jobs. By their reasoning, a law diverting the entire GDP of the United States to the Medicaid program would leave the U.S. awash in jobs. By contrast, the group claims the Bush administration’s efforts to rein-in Medicaid spending will leave tens of thousands of people unemployed.
Gorman quickly picks apart the assertion in four points, using a little fact-checking and basic economic analysis. First:
Roughly speaking, for every four jobs created by spending, five jobs (or their equivalent) will be lost by the taxes needed to finance that spending.
Then:
As it turns out, the Bush Administration has not proposed any Medicaid budget cuts!
Next:
Ignoring where the money comes from, if a 0.3% cut leads to a loss of X jobs, the administration’s 7.1% proposed increase must lead to a gain of about 24X jobs.
And finally:
…[E]xpansion of health care spending for the poor often comes at the expense of other services (food, housing, education) they may value more….
Check out the post for more facts and links to sources.
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