Edwards positioned to break campaign pledge

On the issue of Medicaid expansion, state Rep. John Bel Edwards will have the opportunity to put his money where his mouth is immediately when he takes over as governor in early January, confirming whether he meant what he said during the campaign that he wishes to work together with his political opponents for the good of the state, or if he demonstrates that his habit of dissembling continues.

The Democrat with a Republican legislature near supermajority status in the wake of a report from the Legislative Fiscal Office must deal with a monkey wrench laying waste to plans to push an indirect tax onto health care insurance ratepayers, consumers, and taxpayers. He as well as most of the Legislature intended for last session’s HCR 75 to fund the state’s portion of the expansion by charging most hospitals a fee related to their revenues. In turn, they would pass these higher costs along, causing insurers to raise their rates, taxpayers to pay more for state employee health benefits and for the 2.25 percent tax on health insurance plans for new policies under the state’s managed capitation Bayou Health program that serves Medicaid enrollees, and consumers to have out-of-pocket expenses increase for health care.

But when the LFO picked over the particulars of the resolution, it concluded that the state would receive little if any “savings” – the difference between state costs associated with accepting the federal dollars and the funding responsibilities that go along with it – forecast for the first four or five years (depending on the scenario). This happens because the resolution’s wording in essence does not allow for the swapping out of Disproportionate Share Hospital dollars – federal grant money the state matches for uncompensated care of the indigent uninsured – to go to other Medicaid programmatic uses, and the constitutional amendment that set all of this up creates a funding mechanism starting at a base rate that cannot go lower without cutting of other Medicaid programmatic elements similarly and two-thirds of the Legislature or its Joint Legislative Committee on the Budget overriding, when the Revenue Estimating Conference makes a deficit declaration.

In its mad rush to try to fool the citizenry into thinking to expand invites the partaking of a free lunch (even though a related resolution not passed this spring that prompted an analysis of the fiscal effects of expansion clearly states that any “savings” would last at most five years), the resolution prohibits cutting base rates of any programmatic element, including DSH. The irony here becomes more hilarious in that DSH payments from the federal government probably never will decrease as required under the Patient Protection and Affordable Care Act (“Obamacare”). This selling point to Obamacare, that decreased DSH payments would offset increased taxpayer costs to expand Medicaid, Congress already abrogated by delaying any decrease due to complaints from “safety net” hospitals (those with a large proportion of uncompensated care patients). It turns out that these hospitals in states that already have expanded Medicaid found their UCC patient volumes overall not only had not decreased, but even expanded, due to the inability of other Medicaid providers to have enough capacity to treat them in an environment of a vastly larger service population and declining reimbursements.

This drafting flaw means the “savings” of around $100 million aggregate through fiscal year 2019 likely disappear in their entirety, cancelling the only real selling point proponents of expansion ever had, that it would help ameliorate the state’s budgetary struggles in the short term. Many legislators who supported both the amendment and resolution – including most of the Republicans who either did not study the issue in detail to understand that expansion puts the state on the hook for around $4 billion in the decade after the intended “savings” of the resolution wear off or those who cynically supported it as a partial lifeline out of budgetary difficulties – would not vote for a mechanism for expansion that “saves” the state no money whatsoever in any year.

Edwards could ignore all of this and basically expand on his own without inviting the Legislature to address the situation, but that would subvert his promise of working across partisan lines as governor. Or, he could reopen the process by asking for a new resolution from the Legislature to allow shuffling of money to allow for the alleged “savings,” but that risks greater publicity about the enormous costs the state would take on in the future with expansion and the indirect tax it levies on the citizenry, as well as breaks his vow to expand Medicaid immediately upon assuming office, potentially leading to its defeat.

So, this puts Edwards in a bind already: expand immediately and expose quickly his rhetoric on cooperation as false, or hold off but risk not achieving this ideological imperative and repudiate his statement that he would expand upon entering office. If he’s serious about keeping an important campaign pledge, he’ll opt for the latter; otherwise, his first act as governor will adhere to his penchant for fabrication witnessed during the campaign.