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Medicaid expansion helps boost personal incomes in Pa.

| Monday, June 22, 2015, 1:36 p.m.

The Medicaid expansion that went into effect this year thrust Pennsylvania into the top-10 states for personal income growth in the first quarter.

The state ranked ninth nationally, with a seasonally adjusted 1.1 percent increase in personal income through the first three months of the year, according to U.S. Bureau of Economic Analysis data released Monday.

Pennsylvania's gain was driven by a nation-leading 3 percent boost in government benefits — or “transfer receipts” — tied to the expansion of the Medicaid program under the Affordable Care Act that went into effect in January.

“This is money that gets counted as personal income, but was nothing more than a transfer of money from the government to the individual,” said Frank Gamrat, an economist at the Allegheny Institute for Public Policy. “It is not a sign of an improving economy.”

The Medicaid expansion was part of a deal that former Gov. Tom Corbett, a Republican, reached with federal health officials in August to extend coverage to up to 600,000 residents. His replacement, Democratic Gov. Tom Wolf, has pushed for a more robust expansion under the Affordable Care Act.

Expanded government benefits drove much of the growth nationally, although not as much as in Pennsylvania. Social security payments were boosted by a cost-of-living adjustment that went into effect this year, leading to the largest quarterly increase in income from “transfer receipts” in five years, the BEA said.

Without those programs, personal income growth in Pennsylvania was lackluster. The net earnings from wages and salaries, minus contributions to government programs, increased 0.7 percent in the first quarter, behind the 0.8 percent national average.

Earnings for health care workers increased the most, followed by construction workers. Earnings for mine workers in Pennsylvania declined as low natural gas prices caused companies in the Marcellus shale to curtail production.

Chris Fleisher is a staff writer for Trib Total Media. He can be reached at 412-320-7854 or cfleisher@tribweb.com.

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