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Healthcare: One person’s expense is another person’s revenue

by Mark Carter

Last year, while the healthcare reform debate was raging, the Health Enterprises Network brought the noted Princeton University economist Ewe Reinhardt to Louisville to discuss health care reform.

Reinhardt opened his talk with a discussion of economies. While he acknowledged the differences in ideology, he rightly pointed out that much of the political difficulty surrounding the reform issue on Capital Hill could be traced to a basic economic fact.

One person’s (out-of-control) cost is another person’s revenue.

Deborah Yetter’s article in this mornings Courier-Journal, “Medicaid Cuts: Can Kentucky Limit the Pain?” uses Main Street in tiny Bedford, Kentucky to drive home the point. She spoke with Bob Yowler, pharmacist and owner of Morgan Drugs, who described the importance of his store’s Medicaid patients to his business and to the local economy. Morgan Drugs employs 12 people, which isn’t a trivial number in Trimble County — the county has a population of about 8,000 and an unemployment rate of 14 percent.

There is no denying that the Commonwealth faces a daunting task in terms of trying to balance the health needs of Kentucky’s poorest citizens with available revenues. However, one cannot ignore the devastating economic impact of slashing the $5 billion program by 20 percent. Little Bedford might not scare you, but cut 20 percent out of the Medicaid budget in Louisville and every single health care provider, supplier, pharmacy, and vendor will be laying people off in droves.

So, legislative leaders, especially those whp aspire to the governor’s office,  may want to watch the rhetoric on this issue. Even forgetting the negative economic impact of our nation-leading poor health status, there is a business case to be made that expanding Medicaid is in the best interests of the Commonwealth. We simply need to look at new models and approaches, and not the tactics employed by political a Chainsaw Al.

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