Ala. Economist: pro-Medicaid expansion studies 'don't pass the smell test

Dr. Scott Beaulier, Executive Director of Troy University’s Manuel H. Johnson Center for Political Economy

Dr. Scott Beaulier’s résumé is nothing if not impressive. It reads something like this…

• Ph.D in Economics from George Mason University
• Distinguished Fellow at The Laffer Center for Global Economic Growth (You remember Art Laffer, right? Ronald Reagan’s top economic policy adviser? Yea.)
• Economics Department Chair and Distinguished Professor of Capitalism at Mercer University
• Editorial Board Member, Journal of Entrepreneurship & Public Policy
• Adams-Bibby Chair of Free Enterprise, and now Executive Director of Manuel H. Johnson Center for Political Economy at Troy University

…The list could go on and on.

So when Beaulier earlier this week waded into the ongoing debate over what kind of economic impact expanding Medicaid under ObamaCare would have on the State of Alabama, it was kind of a big deal.

Not only did Beaulier and fellow Troy professor Phillip Mixon lay out in great detail the detrimental impact expanding Medicaid would have on the state, they also placed some of their colleagues at the Univ. of Alabama and UAB directly in their crosshairs.

This wasn’t your typical nerd fight.

For some background, The Alabama Hospital Association commissioned UAB and UA to do studies on what type of impact expanding Medicaid under ObamaCare could have on Alabama.

UAB said the state could gain nearly $1 billion in new tax revenue if the state would expand the program. UA then based their study on UAB’s findings and said that 30,700 new jobs could be created in the state over the next several years, and as many as 51,918 if all eligible individuals enrolled in an expansion.

Gov. Bentley called the studies “bogus” and said he would continue holding the line against an expansion. But the propaganda war continued.

UAB followed up their “study” by releasing a “survey” claiming Alabamians overwhelmingly supported expanding Medicaid. Most of the mainstream media — who ideologically support Medicaid expansion — played along.

Then this week the Troy economists came along and dropped the political equivalent of an atom bomb on the pro-Medicaid expansion campaign.

The Troy study, titled “The Feasibility of the Medicaid Expansion in Alabama,” explains in very simple terms the numerous errors and logical fallacies contained in the UAB and UA studies.

UAB was completely wrong about how Medicaid expenditures are taxed in the state of Alabama. They included local taxes as a funding source for Medicaid, which they are not. And they grossly underestimated the administrative costs of adding 500,000 individuals to the government’s healthcare rolls. Add all of that together and you’ve got a final product that the Troy study asserts doesn’t even come close to reality. To make matters worse, UA then used UAB’s study as the starting point for their economic impact projections.

Yellowhammer caught up with Dr. Beaulier from Troy University earlier this week to find out what compelled him and his team to take on the Medicaid issue.

“All of this came out of frustration with a lot of the mainstream media coverage we were seeing about Medicaid expansion,” Beaulier told Yellowhammer by phone. “This idea that it could increase state GDP by 50 percent — the assumption that taking all of this federal money is a good thing, that it is ‘free money’ — so much of what we were seeing just didn’t meet the standard of basic economic reasoning. When you pick it all apart, Medicaid expansion is not so great for Alabama.”

In fact, the Troy study found that even under the best-case scenario, the revenue gained by expanding Medicaid would only outpace the added costs for the first three years of the expansion when the federal government would be picking up 100 percent of the tab. After that, Medicaid would continue to devour more and more of Alabama’s General Fund Budget, exacerbating its already serious problems. They also found that the state would face a significant shortage of medical professionals, especially in rural areas.

So how could the UAB and UA studies get it so wrong?

“I assume it has to do with who commissioned the study” Beaulier said. “They were well paid and knew what their clients were looking for. I think most economic development studies are biased. What typically happens is a group comes in and they say, ‘Ok, here are our targets. These are the numbers we want to hit.’ They pay in advance and they explain what they are looking for. So the researchers being paid to do the study makes sure they get the numbers to work and hit those targets.”

Yellowhammer asked Dr. Beaulier if Troy had been commissioned by an outside group to conduct their study and he said they had not.

“Look, they could have come in and said, ‘we believe more people should be covered by Medicaid and this is a cost worth baring,’” Beaulier continued. “But that’s not what they did. They said it would be good for Alabama’s budgets, too. That’s absurd. A lot of the things they are saying are unreasonable. The other studies just don’t pass the smell test. They stink.”

Dr. David Becker of the UAB School of Public Health told the Birmingham Business Journal that they stand by their study and downplayed the concerns raised by the Troy economists as simply differences of methodology. If that’s any indication, the debate over expanding Medicaid in Alabama will likely continue to rage on.

This will be a nerd fight worth watching.

Follow Cliff on Twitter @Cliff_Sims