New data reaffirm wisdom of rejecting Medicaid expansion

Since the Louisiana Legislature last reviewed the issue last year, the case for Medicaid expansion in the state, recently advocated by Sen. Mary Landrieu, if anything has gotten weaker.

Complementary to Landrieu’s call, varied legislative Democrat co-partisans of hers have filed several bills that would, in various ways and to various degrees, force the state into expansion.  Yet since similar bills floundered in 2013, three important developments have occurred that degrade the already insufficient case for it even further.

One is that the forecast costs of the Patient Protection and Affordable Care Act (“Obamacare”), which is related to expansion continue to spiral out of control. Now the net cost of $1.5 trillion through 2019 is estimated at almost double the figure at which it was sold. This only increases the pressure to cost blend the states’ contributions for Medicaid, which for most programs under this umbrella is computed on a yearly formula that most recently was spit out for Louisiana at 62.26 percent.

But expansion has a different set of rules where the federal government is far more generous (oddly, since the current qualifiers for regular Medicaid make much less money than those for it to be expanded to, so it makes little sense if the federal government really wanted to subsidize health care insurance to those to whom it would constitute the greatest benefit why a state should pay much more for those very people). The sliding scale begins with the federal government picking up the entire tab from 2014-2016, and then reduces it by increments to 90 percent beginning in 2020 and beyond.

Yet with hundreds of billions of dollars extra now forecast into Obamacare costs, additional pressure will come to make the states pony up more expanded Medicaid costs. Under the most likely scenario by 2023 the state will be spending an extra $92.5 million a year by then this excess growing at 15 percent a year, which means by 2030 at that rate the extra cost to Louisiana under expansion would have reached $246 million annually and total for the decade about a billion dollars extra, thus any reduction below 90 percent reimbursement would multiply disastrously the amount Louisiana can be expected to pay (and once expansion is accepted, it subsequently cannot be rejected, a fact ignored by a few bill authors out there). For example, if the expansion rate went down to 80 percent, over the 2015-23 period that would cost the state over $500 million more. That additional crushing burden would come at the expense of taxpayers and/or programs.

Keep in mind that this is an optimistic scenario. Under more pessimistic ones, the state pays more even when the reimbursement is at 100 percent, by raising provider rates in order to reduce utilization that results in uncompensated care costs, which could causes overall state spending to be as much as $1.71 billion more. But, as it turns out, other factors seem to conspire to keep emergency room usage higher despite expansion’s promises.

Another unfavorable development for expansion is what has been discovered about Obamacare’s initial year of forced purchase of insurance. While the Obama Administration has refused to release specific totals, outside researchers estimate that fewer numbers of uninsured and greater numbers of less healthy individuals compared to the overall total signed up than anticipated. This means the impact of expanding Medicaid will not reduce the proportion of the uninsured as much and will not reduce as much the proportion of less healthy individuals in non-covered public, meaning that estimates of ER use and uncompensated care costs will not be lowered as much thought, key to the federal government’s ability to hold at the 90 percent match, and increasing its temptation to lower that.

However, making matters worse still is that not only expansion on its own will not reduce costs as much as advocates have sold, but at best it also makes no difference in health outcomes. A May, 2013 article in the New England Journal of Medicine, observed that, compared to the uninsured population, despite spending more money than the uninsured population, the Medicaid users had no better health outcomes. Worse, it complemented a slew of other studies that suggest that Medicaid users have worse outcomes than if they had no insurance – highlighting a fact often obscured by expansion advocates that access to care is not the same as care received. Apparently, disproportionately the better doctors opt out of participating in Medicaid, meaning your chances are better being uninsured and showing up at an ER.

Not that being a Medicaid enrollee would stop you from heading to an ER. In fact, Medicaid users, despite being in the program and having physicians to see relatively inexpensively, were more likely than the uninsured to visit the ER, even for issues of primary care, according to the article. This dispels a myth about expansion that ER visits, largely related to uncompensated care costs, would go down with expansion and provide cost savings.

Finally, the presumed cost savings for 2014 under the more optimistic scenarios already are gone since expansion is not here, reducing any “savings” that might accrue. But even under the most optimistic scenario, even assuming the 90 percent rate sticks, even ignoring the underestimated uncompensated care costs and other possibilities that could drive that higher, such as the increased demand on primary care physicians that create bottlenecks that end up shunting patients to the ER for primary care, by 2027 the state is in a net negative position by expansion – and clinging to the equally optimistic belief that, despite research that shows otherwise, health outcomes would be better for this population than had expansion not swept them up.

So, the latest available data tell us that not only would expansion not save as much money as   advocates proclaim, but also that it underestimates the costs for all but the most immediate future. Worst, it might lull more people than otherwise into receiving worse care than if they stayed outside of the program as currently constituted. Gov. Bobby Jindal, among others, has said that until dramatic programmatic changes occur, Medicaid expansion for Louisiana would be too costly and wasteful. Time’s passage and the additional data revealed as a result continue to confirm that wisdom.