LA legislators seeing through expansion snow job?
The Medicaid expansion con job perpetrated on Louisiana by the Democrat Gov. John Bel Edwards Administration continues to unravel, as confirmed in yesterday’s preliminary budget hearings by the House Appropriations Committee.
The Department of Health’s request for $14.6 billion for fiscal year would, in terms of operating expenses, vacuum up half of the state’s spending. From the beginning of former Republican Gov. Bobby Jindal’s terms, this more than doubles that amount of a decade ago (including charity hospital costs), both in overall spending and in the amount of general fund dollars expended.
But LDH Secretary Rebekah Gee insisted Medicaid expansion had nothing to do with escalating state costs, saying almost all new spending would come from federal dollars. Further, she alleged that expansion had saved money this fiscal year – the oft-stated number being $184 million – and according to this budget would cause a reduction of $41 million in general fund spending over last year.
If committee members pondered such assertions, they would see just how fast she tap-danced in making these. That leaves aside discounting the fact that LDH never has released any corroborating information on how it derived the savings claim, in stark contrast to comprehensive Jindal Administration reports that showed losses rather than savings from the start of expansion, with hundreds of millions lost annually in just a few years. (Last week, I submitted a public records request to LDH to produce this information; by law, I should hear back from it next week.)
Yet even taking LDH at its word, the figures don’t add up. The state portion of payment for expansion blended to 2.5 percent this fiscal year. Next fiscal year it more than doubles to 5.5 percent, so how could the general fund throw in $41 million fewer despite the state having to pick up more of the tab – and a projected client increase in the 50,000 range? Supposed “savings” come from reduced uncompensated care payments, but those effects largely showed up in this initial year. Further, LDH reported earlier this year that it had badly underestimated expansion costs by $376 million.
Much of the answer lies in two indirect channels for money, self-generated funds and statutory dedications, which include things such as the sick tax imposed on most hospitals at the beginning of this fiscal year. These serve as indirect taxes on individuals, as providers hike their rates to compensate and pass these along to ratepayers and clients, which perhaps helps to explain massive health insurance premium escalations for next year in Louisiana’s public exchange and as well significantly higher rates in group markets. And it does not include other changes such as higher deductibles and co-payments, which are reflected in the increasing proportion of median household income that goes to health care expenditures, that now cost Louisiana households nearly 12 percent of that, about two percent above the national norm and an increase of 2.3 percent since passage of health care reform.
For these two sources of revenues, actual numbers from FY 16 compared to projected FY 18 have gone up an astonishing $452 million or 36.5 percent. Most of these SGF and dedicated new dollars have come from the imposition of the sick tax and other fee increases and redirections in the past two years. Next year’s projections call for an increase of $223 million over this year’s.
That’s where Louisiana’s people pay for Medicaid expansion – through channels obscuring that fact. The Edwards Administration can try to hide the inconvenient truth that the state will pay more and, in an aggregate sense, does not save money at all with expansion (and this does not even count the extra tax/debt burden foisted upon Louisianans in paying their portion of the federal share), but anybody thinking logically will realize the misdirection in which it engages.
As the spending numbers mount, legislators finally may have started waking up to the shell game practiced by Edwards on the issue of Medicaid expansion. Now the question is what will they do about a program crowding out other state priorities and taking more than ever of what Louisianans earn without making the matter worse.
Posted by Jeff Sadow at 12:55