Medicare, Medicaid cuts threaten hospitals' economic impact

What's good for the hospital is good for the economy. Such is the case in Louisiana, where its hospitals produce more than $27.1 billion annually in economic activity and directly employ more than 99,350 people throughout the state, according to a study by the Louisiana Hospital Association (LHA).

"People often do not realize that hospitals are huge contributors to our economy, even during an economic recession," LHA President and CEO John Matessino said in a statement. "Every dollar spent by a hospital supports 95 cents of additional business activity, and each hospital job supports approximately 1.4 additional jobs."

In 2009 to 2010, hospitals averaged about $903.7 million in building construction, as well as $978.6 million on capital expenditures associated with new equipment. By doing so, hospitals led to the creation of 15,717 new jobs in industries outside healthcare, according to the report.

What's more, the economic activity supported by hospital spending produces $690 million in state tax collections and $567 million in local tax collections.

But that economic impact could be jeopardized by cuts to Medicare and Medicaid, as proposed in President Obama's deficit plan.

The federal programs are the main sources of funding for Louisiana hospitals and make up 71 percent of hospital services delivered statewide.

The report projects that cutting state Medicaid expenditures by $150 million would cause Louisiana to lose 6,764 jobs and $800 million in business transactions.

To learn more:
- read the AHA News Now brief
- check out the study

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