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Research by one of Alabama’s leading economists shows Alfa Health Plans would benefit local economies and state budgets by freeing up money spent on health coverage for other needs.
M. Keivan Deravi, PhD, retired professor of economics at Auburn University Montgomery, found Alfa Health Plans would have no negative impact on the General Fund budget and could generate between $232,000 and $11 million a year for the Education Trust Fund.
“When insurance premiums decrease, the resulting increase in disposable income creates a multiplier effect as those savings circulate through the local economy,” Deravi wrote in a recent report. “This analysis uses a conservative multiplier of 1.6 to estimate the economic impact of premium savings, meaning every dollar saved on health insurance premiums generates $1.60 in economic activity.”
Alabama Farmers Federation State Legislative Programs Director Russ Durrance said this analysis is key in demonstrating the overall benefit of Alfa Health Plans to the state.
“Misinformation has been shared attempting to undermine Alfa Health Plans by projecting exaggerated costs to the General Fund budget,” Durrance said. “Dr. Deravi’s work proves Alfa Health Plans would actually benefit state budgets. If farmers and other small business owners are saving 30-60% on health coverage, they are going to spend those dollars in their local communities. Alfa Health Plans are good for Federation members, good for our struggling rural communities and good for the State of Alabama.”
Over the last 35 years, Deravi’s forecasts have been utilized by every administration in developing the General Fund and Education Trust Fund budgets. He is the architect of the Alabama Economic Forecasting Model and Alabama Input/Output Model. Both are used to generate forecasts for the state’s major economic variables.
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