Harry Truman famously said that he wanted a one handed economist. The
economists he had were always saying things like, "on the other hand..." However,
not having a one handed economist doesn't stop an advocacy group from
one handed argument. Case
An Arizona State University study estimates that cuts to the Arizona Health
Care Cost Containment System would result in the elimination of about 42,000 jobs in
2011, cutting more than $1.7 billion in disposable income among all Arizonans.
The actual study was done for the Arizona
Hospital and Healthcare Association by Dr. Matt Croucher and Dr. Tim James at the L.
William Seidman Research Institute,
W. P. Carey School of Business at ASU. As best I can tell, what they did was
run a model of the Arizona regional economy with and without the AHCCCS spending
cuts. They then reported the differences which the AzHHA then highlights in
their media release.
...the proposed budget cuts will result in a loss of 42,000 jobs, dramatically
increasing an already soaring 9.1 percent state unemployment rate. This significant
reduction in employment would spread across all sectors, resulting in a reduced
level of economic activity throughout the state.
What all of this leaves out is where does the money come from to provide the
additional funds for AHCCCS? If it come from taxes or borrowing or another
part of the state budget, then someone else is left with less money to do something
with. That reduces their
activity and hence jobs. So it's not clear that this funding would be a net
gain or a net loss for the Arizona economy.
In the appendix (A.3) to the report, Croucher and James make it clear that
this analysis was left out.
It was assumed that no other change in public policy would occur. Thus,
no account of the economic impact associated with reductions in expenditure
increases in revenue collection, elsewhere in the economy to solve the
budget problem instead of reducing AHCCCS funding were included. Thus,
we do not include in the discussion any measures of the benefits that invariably
would accrue to other government sectors or to Arizona taxpayers of not
approximately $1 billion in general fund money on healthcare.
Note that doing this sort of analysis would be next to impossible since there
are far too many alternatives to contemplate. So AzHHA used two handed
economists, but they made the one handed argument.
For a copy of the actual report, go to the AzHHA
web page and hit the click
here link under Proposed Fiscal Year 2011 Budget: Healthcare Cuts Hurt State's
Economy. It will download a zip file that includes the study and the media
release among other things.
Labels: healthcare, microeconomics