By Cecil Brown
The Mississippi Legislature recently voted to give $70 million to a Japanese company to build a tire manufacturing company in Clay County.
The company projects 500 new jobs at the plant and a company investment of $300 million. Long-term plans call for a total state investment of $130 million, a company investment of $1.2 billion and a total of 2,000 new jobs. The University Research Center estimates the state will recover its investment within 9-10 years through increased economic activity. The state Senate adopted the legislation unanimously. Two Republicans voted no in the House.
The math is pretty simple. In the short run, the state will spend $70 million to create 500 jobs, a cost of $140,000 per job. Over time, the state will spend $130 million for 2,000 jobs, $65,000 per job. Other states do the same.
Now comes an even larger economic development project at a much lower cost – the expansion of the state Medicaid program. Here’s how. Mississippi will agree to add about 300,000 working Mississippians who currently have no health insurance to its Medicaid program. In exchange, the federal government will pay 100 percent of the medical costs of the expansion for the first three years. After that, the federal reimbursement rate will slowly decrease to 90 percent where it will remain. According to the same Mississippi economists who vetted the Clay County project, over the next 10 years Mississippi will receive nearly $10 billion at a net cost to the state of $368 million. The economists also project the creation of nearly 9,000 new jobs.
But there is more. Under the new Affordable Care Act, companies with more than 50 employees must provide health insurance to their employees or pay penalties of $2,000 to $3,000 per employee. Employees covered by Medicaid are not subject to the penalty. Jackson Hewitt, a respected nationwide tax preparation service, estimates that if Mississippi does not expand Medicaid, Mississippi employers could be subject to penalties ranging from $21.7 million to $32.6 million.
Mississippi’s hospitals, including the University of Mississippi Medical Center, will lose up to $200 million per year to pay for the uninsured. Medicaid expansion will replace most, if not all, these dollars. If we reject the expansion, UMC will lose $100 million, and the state’s other hospitals will share in the loss of the other $100 million.
The math is pretty simple.
1) Reject Medicaid expansion and subject small employers to substantial penalties, forego 9,000 new jobs, face the closure of local hospitals and the loss of hundreds of jobs and reject $10 billion of new federal funds over 10 years, or
2) Expand Medicaid, provide 300,000 working Mississippians with health insurance, and create 9,000 new jobs at a fraction of the cost per job that the Legislature just spent in the single county of Clay.
You don’t have to be an economist or a mathematician to figure this one out.
CECIL BROWN, CPA/PFS, is a Democratic member of the Mississippi House of Representatives from Jackson. Contact him through Brandon Jones, email@example.com.