The refusal to set up exchanges is a no-brainer. The federal government’s decision to impose a 3.5 percent surcharge on coverage sold through the exchanges indicates that states would expect similar costs to them that will go only higher in time. One ballpark estimate puts the per enrollee cost at $97, but Maryland’s looks to come in at over $200, and the federal government will pay for these costs only through 2015. With the probability that the whole unworkable law will unravel in the future, why should Louisiana commit itself now to extra costs requiring extra revenue when state exchanges hardly can deviate from regulations that would run federal exchanges anyway?
In that lie several ticking time bombs that could increase state costs dramatically, the least of which is natural rises in medical costs. There exist not just the administrative costs, which historically equal 5 percent of the benefits paid and are not part of the federal government match, adding perhaps as much as cost as (when the state has no match) $20 million annually, but also independently of the expansion also must swallow swelling roles because of broadening eligibility requirement changes beyond those of expansion for new qualifiers below $11,200. Also, the reduction of disproportionate share Medicaid payments to hospitals will hit Louisiana harder than any other state until it can wind its way out state operation of charity hospitals. Finally, as cost estimates continue to spiral upward for all of the changes made, not just including costs of the expansion, the fear grows that the federal government will renege on its 90 percent match and go to a blended rate or lower rate (on all other aspects of regular Medicaid, it pays just 50 percent).