Medicaid Expansion Studies Weren't Trustworthy

Analysis reveals multiple flaws

It may be water over the dam, but one report on the potential impact to employers if Michigan did not adopt the Obamacare Medicaid expansion has been exposed as being essentially bunk due to flagrant misuse or misrepresentation of the data it cited.

This is worth noting because the claims from Jackson Hewitt were widely cited by Republican lawmakers here who supported the expansion, and probably tilted others into that camp. Its conclusion was that "employers may pay substantially higher federal tax penalties under the ACA (Affordable Care Act) in states that do not expand Medicaid." Jackson Hewitt estimated Michigan employers would pay between $42 million and $63 million in penalties without the expansion.

Not so fast.

The Foundation for Government Accountability's Jonathan Ingram took a closer look at the Jackson Hewitt report and has just released a paper describing its shocking shortcomings. Here's the gist, as distilled by a useful daily digest produced by the National Center for Policy Analysis:

  • The reports do not estimate the number of full-time employees between 100 percent and 138 percent of the FPL (federal poverty line) correctly. Rather than look at state population data, the authors make an assumption about states' low-income population distribution, leading to wildly divergent numbers. For example, the studies estimate that more than twice as many people are in the 100 percent to 138 percent FPL group in Utah than there are in reality. These miscalculations lead to incorrect calculations of employer costs.
  • The studies include individuals who are already eligible for Medicaid without the state expansion (and who therefore could not trigger employer penalties) in their calculations.
  • Seasonal workers and part-year workers do not trigger penalties either. The Jackson Hewitt calculations, however, include these workers, who constitute one-third of full-time employees within the 100 percent to 138 percent FPL group. Again, this overestimates the potential employer cost.
  • Only 14 percent of full-time employees at large employers are not offered affordable health insurance, yet Jackson Hewitt assumes that 93 percent of employees are not offered affordable health insurance, triggering penalties.
  • The reports assume that employers will subject themselves to these penalties, rather than find ways to work around them. This is unlikely. Employers will restructure their workforce and reduce their workers to part-time work to avoid penalties.
  • The Jackson Hewitt study assumes that the employer mandate will be enforced as it was enacted in 2010, but given the frequency of delays, this is doubtful.

As all Americans have since learned, beware the promises (or warnings) of Obamacare supporters and apologists

Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.