The Potential Economic Benefits for Texas of a Free Trade Agreement between the United States and the European Union  

Import and export activity is an essential aspect of optimizing economic performance.  By allowing each nation to focus resources on those goods and services where it has a competitive advantage and import other products, foreign trade helps improve business conditions and quality of life around the globe.
 
From the beginnings of such exchanges centuries ago, there have been tariffs, quotas, and other impediments to free trade.  Over time, many of these have been eliminated through free trade agreements.  It is a widely accepted economic principle that free trade is beneficial from both the import and the export side, and additional efforts to enhance exchange are worthy of consideration.  While the world has become highly integrated and complex, with extensive intra-industry trade in addition to that between sectors, the basic principles remain in place.

The Perryman Group was recently asked to examine the potential impact of a transatlantic free trade agreement between the United States and the European Union on business activity in Texas.  This analysis reveals that the state would likely see the addition of between approximately $9 billion in economic output and more than 89,600 jobs from a US-EU free trade agreement, with additional potential gains stemming from productivity enhancements and efforts to eliminate non-tariff barriers to trade. 

 

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Texas Has Only One Rational Choice:

Expanding Medicaid Under the Affordable Care Act   

According to an analysis by The Perryman Group, every $1 spent by the State of Texas to expand Medicaid coverage under the Affordable Care Act (ACA) returns $1.29 in dynamic State government revenue over the first 10 years of the expansion. Medicaid expenditures lead to substantial economic activity, federal funds inflow, reduction in costs for uncompensated care and insurance, and enhanced productivity from a healthier population. When these outcomes and the related multiplier effects are considered, the program actually far more than pays for itself and provides a notable economic stimulus.

The relevant question at present is not philosophical, but practical,” said Dr. Perryman. “It is not an issue of whether Medicaid and the ACA are perfect – they are not! Even so, given the current framework, the best choice for Texas from an economic perspective is participating in the Medicaid expansion under the Affordable Care Act. It represents one of those rare occasions where Texas can provide significant services for many of its least advantaged citizens while simultaneously stimulating the economy and taking the most fiscally responsible course. Whether Texas opts in to this program or not, our citizens and businesses will pay the federal taxes that support it.”

 

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Expanding Medicaid Under the Affordable Care Act Benefits Industries, Communities Across Texas  

Local areas across the state would receive an economic boost if Texas expands Medicaid coverage under the Affordable Care Act (ACA). According to an analysis by The Perryman Group, increased economic activity over the first 10 years would range from just over $1 billion in smaller population centers to more than $64 billion in the largest.

“Every community across the state would share in the benefits of expanding Medicaid coverage,” said Dr. Perryman. “While the Medicaid system and ACA are not perfect, they are key aspects of the current health care environment in which Texas must function. From an economic perspective, there is only one rational choice: Texas should participate in Medicaid expansion.”

 

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A Texas Solution: Effects of Implementing a Private Exchange Option for Newly Eligible Medicaid Recipients  

Recently, the federal government has indicated that utilizing Medicaid funds to purchase private insurance for newly eligible individuals could potentially be permissible, thus opening up another set of possible frameworks for states to craft workable plans. Local areas across the state would receive a significant economic boost if Texas expands coverage under the Affordable Care Act (ACA) using a private exchange option.

An exchange is a private-market solution where competition among insurance providers will stimulate innovation and cost reduction measures while avoiding some of the flaws of the Medicaid program. Utilizing the Federal funds designated for Medicaid expansion under the ACA to provide private insurance coverage for the newly Medicaid-eligible population through such an exchange would increase the economic benefits to the state by both decreasing the administrative costs to the state and increasing the potential gains.

The Perryman Group found that during the first 10 years after implementation, the total cumulative net benefits to the state economy from both higher enrollment in the existing Medicaid program and the use of the private exchange for the newly eligible population include $300.8 billion (in 2012 dollars) in output (real gross product) and more than 350,000 jobs in an average year over the timeframe. These benefits stem from health care spending, federal funds inflow, reduction in costs for uncompensated care and insurance, and enhanced productivity from a healthier population.

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