LA saves for real with Medicaid user responsibility

Members from Louisiana’s House of Representatives blocked immediate approval of Medicaid managed care contracts over cost concerns, but requests for more efficient delivery only scratch the surface of how state government can save money.

The Joint Legislative Committee on the Budget last week asked the Department of Health to come back with better offers to the five providers of these services. Almost all Medicaid enrollees in the state potentially at least partially have services rendered to them mediated by these outfits. Without dramatic changes in spending patterns, the 23-month deals worth $15 billion will eat up a quarter of all state expenditures in this period.

Republican members of the committee, comprised of budget leaders from each chamber, led the charge to slow the process. Their Senate counterparts had no objection, but majorities of both must agree and the GOP makes up most of the House contingent. They argued the state should negotiate more savings and tighter oversight, pointing to recent audits that revealed problems in enforcing accountability.

A delay of a month won’t cause any problems, especially given that LDH is less capable than ever of controlling cost because of the firehose of money sucked from taxpayers to fund expanded Medicaid. But this action will produce better use of those dollars only at the margins.

The ideal approach would scrap Medicaid expansion, but that remains legally uncertain and, for the next two years, politically impossible with Democrat Gov. John Bel Edwards, who pulled the trigger on the expansion gun that has inflicted this wound on the state, holding veto power or any changes.

However, Edwards might yield on bills that increase patient responsibility. Presently, anyone utilizing regular or expanded Medicaid just has to show up at a provider capable of addressing whatever malady being suffered and receive treatment for free, entirely taxpayer-paid. Yet federal law allows charging of co-payments or premium rebates, neither of which Louisiana imposes.

Charging users less than what a pack of cigarettes costs (almost a third of adult Medicaid users smoke, over twice the incidence of other insured people) for a regular visit and $75 for a trip to the emergency room, and monthly premiums of $35 for certain populations in legacy Medicaid, not only would recapture about $90 million annually, but also would save more because utilization would decline somewhat. People use free services wastefully, and with the crunch on primary providers it caused Medicaid expansion triggered nationwide an increase in ER utilization. Asking recipients to share costs will motivate them to consume medical services more responsibly.

Also, Louisiana could do as several states have by charging premiums to its Medicaid expansion population. For example, Montana charges two percent of income in the 51-138 percent federal poverty level range; for a single individual, that would cost between $10 and $27.50 a month and $13.80 to $38 for a married couple (larger families likely would have children that would qualify under different limits).

Assuming the expansion population entirely comes from these and averages to the 75 percent FPL mark (most above 100 percent likely use heavily-subsidized insurance marketplaces) with three-quarters single, the state using the same rule could realize over $85 million annually. Again, this would not include spending less because imposition of co-payments also would encourage more efficient use of services.

These kinds of reforms can save meaningful dollars, the implementation of which barely would increase costs paid to the five contractors. If the Legislature presented these to Edwards, public opinion in the runup to his reelection attempt might pressure him into signing such bills. If lawmakers want to make real progress on containing the runaway costs of Louisiana’s Medicaid program, it must pursue these solutions.