PAR expansion framework falls short for proper analysis

More information always is better, and in that sense the Public Affairs Research Council has done a service by producing a guideline for analysis of whether Louisiana ought to accept federal money with considerable strings attached to expand Medicaid eligibility. But unfortunately it falls short conceptually, which makes vulnerable whatever recommendations would stem from its suggested course of study to the criticisms it levies.

The report reviews mainly two others from dispassionate, nonpartisan sources that provided the starting point from which Louisiana officials to date have determined not to pursue this option. However, some of its critiques also focus on problems that cropped up in more partisan, less objective analyses (many already addressed prior to this effort here).

Had the effort stopped just at pointing out the shortcomings of analyses based upon these several reports, little value would have come of it. But by then highlighting avenues of data acquisition and analyses that policy-makers ought to pursue provides for a good start. If state policy-makers already are not cognizant of these items in need of periodic review, then this serves as a basic primer on them.

However, a major conceptual problem hangs over it – a willful blindness to the fact that ideas have consequences. That is, when certain incentives and disincentives are presented to human beings, their behavior changes as a result. And throughout the report, certain assumptions are not properly framed because they do not relate to the real-world implications, not just of the expansion but concerning the entire systemic overhaul of which the expansion plays a part, that they have on human behavior.

In some places this failure sits in the background. In its discussion of uncompensated care costs, it treads through familiar territory about refusal of the expansion would jack up uncompensated care costs an environment of presumably falling federal reimbursements for those, and making (as befits a study focusing on meta-evaluation of others not intended as analysis) that greater study occur on this issue for future decision-making purposes. But it fails to recognize that the larger Patient Protection and Affordable Care Act will squeeze supply, prompting potentially greater, not lesser, emergency room usage for primary care than now, or at the very least makes the assumption of demand shift less in degree, meaning that any presumed “savings” realized by expansion because of limitations of UCC funds is untenable.

Nor does the study explore the likelihood, as the costs of the entire new law continually are revised upwards, that this nightmarish growth will continue in reality after implementation, prompting the federal government to reduce its, as of now written into law, 90 percent match for 2020 and beyond (even though it acknowledges it “will remain at that level unless the rules of the match are changed”).  Already the match for traditional Medicaid is much lower (and an adjustment down with that months ago creating some budgetary chaos) and there’s no reason to think this one cannot drift down to that level currently in the low 60s of percent. No recommendations of introducing some kind of contingency analysis that would capture the higher-than-predicted costs to the states for the futures of this or UCC dollars appear, which surely must be a part of any decision calculus, lest the state become victimized by a bait-and-switch.

Yet in one place there exists a very obvious error, in the discussion about how much a state “gains” from expansion. The thinking is that the federal government pumps in hundreds of millions of dollars a year, increasing economic activity. The problem comes from the report’s utter disregard that the money doesn’t just come floating down from the sky. Rather, it comes from the pockets of Louisianans, and from all American citizens and/or workers. This will have a decidedly negative economic impact on the state and country.

While one could argue that if state tax receipts will suffer because of the drag produced on the economy regardless of expansion then the state ought to get its “share” of federal largesse by opting for expansion (not exactly true – Louisianans will have slightly higher costs to pay for this added portion of recipients, either now in the form of taxation or later in the form of debt), the incremental direct state costs to expansion – administrative (for each incremental client and regulating this new class), regulatory (state businesses having to track people coming on and off their own programs), systemic (substituting more people into the less effective, less efficient Medicaid system from private provision) and allocable (forcing resources into the system that might be better spent on other government activity, also both on grounds of efficiency and effectiveness) – also exist that would not without expansion for which Louisianans will have to pay, now or later either in resources or in loss of other services. No suggestion appears in the report to investigate this aspect (aside from professing skepticism that Arkansas will reap a certain amount of revenues as a result of expansion).

So while it gets thinking going on the issue, the report stops short of presenting a completely holistic and valid framework for further inquiry. It has value in pointing out gaps in data and knowledge, but its incompleteness stemming from its constricted worldview of the larger issue means that to apply only its approach as specified would present a distorted picture of the impact of the expansion.