The Economics of Optimism

, Malcolm A. Kline, Leave a comment

Perhaps you can call it the economics of optimism: a George Washington University economist predicts there will be job gains under Obamacare.

In a recently completed study, GWU professor Leighton Ku predicted that the state of Arizona will gain thousands of jobs due to the Medicaid expansion mandated by the Affordable Care Act and Kansas will see a gain of hundreds of new jobs.

He attributes this to a “trickle-down,” “multiplier” when “a doctor hires somebody and expands his office.”

“There will be billions of dollars going into the state, so there will be more employment,” he said in a luncheon presentation on his findings last Wednesday. “They are not necessarily doctors but health care workers, medical technicians and so forth.”

“There is the hope and the assumption that the increased funding will lure doctors back into Medicaid,” he said, in addressing the decreasing number of MDs, particularly those willing to participate in the Medicaid program. “Doctors actually make up a small percentage of health care workers,” Ku pointed out.

“There is a concern, and I’ve written about it, that come 2014, we’ll have all this demand for health care but not have the providers,” he said. He added, “the high federal matching rate makes expansion financially attractive to states.”

“It raises economic activity and employment in all areas, particularly health care.”

“Part of what makes this so positive are the new taxes imposed by the governor of Arizona.” He admits that projections can be “smart guess work.” Ku’s study focused exclusively on state hospitals.

He was formerly employed at the left-leaning Center for Budget and Policy Priorities.In his presentation Ku made no mention of corresponding private sector job losses.

In an earlier presentation at the same event, Michael Chow, an economist with the National Federation of Independent Businesses (NFIB), noted that supporters of Obamacare claimed that it would generate “four million jobs, and 400,000 immediately.”

These new positions are hard to locate in Bureau of Labor Statistics data Chow laid out at the luncheon, which was sponsored by REMI, or Regional Economic Models Incorporated. “If the Patient Protection and Affordable Care Act has created jobs, it hasn’t been in the small business sector,” Chow said. NFIB represents 350,000 small business members.

Small businesses have accounted for two-thirds of net new jobs over the past quarter century, and half of all private sector employment, Chow noted. Chow previously worked for the Office of Economic Policy and Analysis at the Department of Labor and for the President’s Council of Economic Advisers.

It should be noted that some employees hired by the federal government to implement Obamacare are not facing the same threat as other federal workers who have been furloughed, sequestered or simply laid off.

Last week, the U. S. House of Representatives Energy and Commerce Committee reported that, “During Wednesday’s Oversight and Investigations Subcommittee hearing on the implementation of Obamacare, a troubling fact came to light – as the Obama administration is furloughing FAA workers, including air traffic controllers, workers responsible for the implementation of Obamacare are not facing the same time away from their work. Rep. Gregg Harper (R-MS) questioned Center for Consumer Information and Insurance Oversight (CCIIO) Director Gary Cohen about the effects of the sequester on the implementation of the President’s health care law. Cohen responded that CMS [the Centers for Medicare and Medicaid Services] was simply under a “hiring freeze.” However, despite the claim that CMS isn’t hiring, a simple online search reveals that the agency opened up hiring for a new health insurance specialist just this week.”


Malcolm A. Kline is the Executive Director of Accuracy in Academia.
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