by J. Scott Moody
Maine Heritage Policy Center
March 06, 2014
Many of Maine’s policymakers have already fallen for the siren call of Medicaid expansion as provided for under the provisions of the Affordable Care Act (Obamacare). At first glance, expanding Maine’s Medicaid program looks like free money since Uncle Sam has promised to pick up the entire tab for the first three years. Who doesn’t like free money? In reality, nothing is free. Maine has already been growing increasingly dependent on Medicaid and paying a steep economic price as public sector spending crowds out the private sector (see Methodology section for details). Obamacare’s expansion of Medicaid will come at the expense of long-run economic growth by further shrinking Maine’s anemic private sector. This analysis estimates a reduction in the long-term growth in the economy and does not necessarily mean the elimination of existing household income or jobs. It does mean that future income increases and job creation will be lower than they would be in the absence of higher taxes and spending. Furthermore, this analysis underestimates a long-term decline in the private sector that will occur because of a slower private sector growth rate.

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