Acadiana Business

Report says Medicaid cuts hurt La. economy

by Heather Miller

The health care sector in Lafayette employs 21,504 people and shells out more than $732 million in payroll annually.

A recent study by the Louisiana Hospital Association and LSU economics professor Jim Richardson says continued state budget cuts to Medicaid would have a detrimental impact on the state's health care system and trickle down into the state's overall economy.

The report points out that the health care industry in Louisiana employs roughly 16 percent of the statewide workforce and accounts for approximately 15 percent of private payroll. The study, "Hospitals and the Louisiana Economy 2011," says more than 99,000 of the state's health care employees work in hospitals, which pay a collective $4.4 billion per year to their workers.

Also included in the study are breakdowns for metropolitan statistical areas across the state. In Lafayette's metro area, 21,504 people work in the health care sector, with 6,152 of those employees working in hospitals. Hub City hospitals account for 4.7 percent of regional employment:

Hospitals account for [2 percent] of all healthcare establishments in Louisiana; however they comprised 37% of the total employees and 46% of the total payroll of the healthcare sector. Healthcare providers are a major economic influence within a community, and hospitals are often the most dominant contributors to a community's economy.

Medicaid and Medicare account for 71 percent of the hospital services delivered in the state and are the primary funding sources for hospitals in Louisiana. For every 35 cents the state spends on the Medicaid program, Louisiana receives approximately 65 cents from the federal government. Because of this federal match, the impact of the state reducing its direct expenditures for Medicaid by $150 million would be a loss of an additional $430 million of federal dollars, reducing overall funding by $580 million.

From 2009 to 2010, Louisiana hospitals averaged about $903.7 million in building construction, leading to the creation of more than 15,717 new jobs yearly in sectors other than healthcare. The overall economic activity that is supported by hospital expenditures, including payroll, supplies and other services, leads to $690 million in state tax collections and $567 million in local tax collections.

Read the full report here.