Obamacare Medicaid expansion would harm Oklahoma’s economy

December 23, 2013

President Barack Obama believes that food stamps help boost the economy. In like manner, many of our friends on the left and in the hospital-industrial complex (which Avik Roy calls “the most heavily government-subsidized industry in the history of the world”) believe the Medicaid expansion permitted under the president’s rapidly crumbling health law would boost Oklahoma’s economy.

OCPA economists Scott Moody and Wendy Warcholik disagree. Moody and Warcholik, co-creators of the Tax Foundation’s popular “State Business Tax Climate Index,” argue that Medicaid expansion would hurt Oklahoma’s economy. How so? They point to the significant positive correlation between per-household personal income and the private-sector share of personal income. “Put simply, the bigger the private sector, the greater the per-household personal income,” they write. “States with larger private sectors will grow faster over time than states with smaller private sectors.” Adding 261,000 Oklahomans to the medical-welfare rolls will only serve to deepen Oklahoma’s dependency and will retard long-run economic growth by shrinking Oklahoma’s private sector.

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