Scurrying to leave LA's Medicaid sinking ship

The crew knows the ship is sinking, so they’re jumping overboard while Louisiana Medicaid’s clients and taxpayers will find themselves taken in the undertow unless the Democrat Gov. John Bel Edwards Administration makes a change from politicized ideology to practicality.

At the end of the month, Department of Health Secretary Rebekah Gee will leave her job, undoubtedly for one where the consequences of her preference for statist solutions won’t redound as they have in Louisiana (as well as give her greater license to support propagation of abortion as she did prior to her stint at LDH). Long-time director of Medicaid for the state Jen Steele already has decamped.

Edwards’ decision to expand Medicaid turned out as the most consequential policy enacted in his first term. It committed the state eventually to spend an extra $3 billion annually –in one fell swoop adding 10 percent to the operating budget – of which Louisiana taxpayers now directly contribute an extra over $300 million a year they didn’t pay before, essentially raised by increased taxes on insurance policies.

This led to hundreds of millions of dollars in unnecessary payments annually, for three reasons. First, changes implemented by Gee deliberately inflated the amount of inappropriately-paid, wasted taxpayer dollars, through reversal of reforms to the eligibility process enacted late in Edwards’s predecessor’s term and by making automatically eligible Supplemental Nutrition Assistance Program recipients that imported without additional checking the SNAP eligibility error rate.

Secondly, failure to emphasize eligibility verification, including slow-walking systemic software changes, led to nearly $100 million annually in waste from just a handful of ineligible clients, an amount determined by the Louisiana Legislative Auditor. The auditor didn’t review all half-million-plus expansion clients, which would have added much more to this total.

Finally, as many as half of recipients already had health insurance, meaning taxpayers now pick up as much as $150 million a year that used to be the responsibility of the individuals being insured. This wealth redistribution, supercharged by lax eligibility verification, worked as part of Edwards’ reelection strategy as a way to buy votes, and Gee shamefully aided and abetted that at the expense of the people.

Understanding this explains why scandal punctuated the end of Gee’s and Steele’s careers at LDH. Recently, the state’s chief procurement officer ruled that the department violated the law and its own rules in awarding multi-year contracts worth $21 billion for running the Medicaid program. Because of expansion that now has over a third of state citizens on Medicaid, these have become more valuable than ever and the department apparently bent the rules to favor homegrown Humana Health Benefit Plan of Louisiana, which has no experience in this area, over veteran current operators.

That’s bad enough, but the real scandal has yet to come. Fortunately, after the bad publicity of audits, the Edwards Administration finally began to implement tighter eligibility review that have shed tens of thousands from the expansion rolls resulting in saving taxpayers hundreds of millions in cash annually. But that will represent just a blip on the radar as the inefficient Medicaid model that makes no attempt to rein in unnecessary care expenses continues to suck money from taxpayers in years to come as medical inflation continues to outpace economic growth. This ticking time bomb only becomes worse and worse.

The previous majority-Republican Louisiana Legislature offered measures to increase patient responsibility that not only would derive some income to offset Medicaid’s massive expenditures – now the largest part by far of a budget eating up about half of all state spending – but also in the process deter unnecessary costs. But the Edwards Administration has paid solely lip service to the idea, refusing to make a serious effort to put into motion such a policy which it could do by administrative rule.

The federal judiciary eventually might save Louisiana by declaring expansion unconstitutional, which would trigger a state law that Edwards initially opposed that would run a scaled-down, more reformable version of it. Absent that and the addition of patient responsibility measures, this unneeded freebie will continue to eat Louisianans out of house and home. And those responsible for it like Gee who eye career advancement want to distance themselves from association with that as much as possible.