Scratch the fantasy that Louisiana big government advocates had that recent new spending commitments wouldn’t put the state into future fiscal distress, exacerbated by wasteful Medicaid policy decisions designed more to expand the number of people on this dole rather than to help the state’s most vulnerable citizens.
Last month, the Division of Administration presented updated financial numbers reflecting trends in revenue collection and spending since the Revenue Estimating Conference last set such numbers in stone in May. These will go into one of the two recommendations for revenues and expenses certified by the REC close to year’s end.
While this report predicted a surplus of nearly $150 million for the next fiscal year of 2024-25, the bottom drops out in the next two, where both FY 2026 and FY 2027 are forecast to produce each nearly a half a billion dollar deficits. The end of the 2016 and 2018 sales tax increase of 0.45 percent mainly drives the new gap. Worse, tax changes from the 2023 legislative session have yet to be factored in, which could have a further negative impact.
This wasn’t music to the ears of a number of legislative leaders who recklessly drove new commitments into the FY 23 budget, rather than bank funds for the well-known rougher period ahead as a subset of House members had advocated Some had fantasized openly that the false economy that had produced surpluses courtesy of federal government hyper debt-fueled Wuhan coronavirus pandemic transfer payments would continue to an extent to prevent this hard landing, perhaps masking an agenda of locking in this spending to goad future legislators into having to renege on termination of the tax increase.
Yet if that revenue loss proves most problematic – in fact, combining the tax rollback with the withering of the false economy leaves the state with half a billion fewer bucks in revenues in FY 27 as compared to the recently-completed FY 23 – another huge expenditure rise is a close second. Medicaid spending, with increases largely driven by Democrat Gov. John Bel Edwards’ decision (with authority granted to him by the previous Legislature) to expand it beyond the truly needy, is forecast to cost nearly a quarter of a billion dollars higher this fiscal year than previously thought and will increase steadily to nearly $700 million more by FY 27. And this after an ongoing process to unwind otherwise-ineligible recipients allowed to stay on the rolls as a result of the pandemic that should reduce costs by hundreds of millions of dollars annually.
Medicaid costs continue to soar, with the latest FY 21 figures showing 42 percent of the state’s population enrolled in it to the tune of $6,649 each, meaning then over a third of every budgetary dollar spent or $14 billion went to the program – and in terms of state dollars, about a fifth. The rush to squeeze in as many people as possible – optional expansion alone has ballooned state costs $451 million more annually as of two years ago where a third to a half of those taking advantage of that previously paid for their own health insurance through other means – has been a hallmark of the Edwards Administration and shortchanged the state’s ability to fund other needed priorities.
And the appetite to redistribute wealth by this mechanism has gone so viral with Edwards that, as the Louisiana Legislative Auditor recently reported, it includes indifference towards enrollment of noncitizens of the state into Medicaid. From Sep., 2016 – three months after expansion began – through this February, an audit identified $112.6 million was paid out to 13,771 holders of driver’s licenses in other states, a number of out-of-state providers, and 380 clients verified as living out of state.
Like most states, Louisiana’s Department of Health chooses lax verification requirements for residency. Some of the waste was exacerbated by the pandemic regulations that allowed ineligible recipients to continue to take part in the program, and although the audit doesn’t break down the wasted amounts by years, the narratives described clearly indicated a significant portion occurred prior to the 2020 rules relaxations.
Most ironically and tragically, these wasted resources could have ameliorated a crisis that has grown throughout Edwards’ terms in office affecting the state’s most vulnerable Medicaid recipients: those utilizing waiver services designed largely to aid people with disabilities. Nationwide, an escalating shortage of nursing care and other lesser service interventions has put this service provision increasingly into jeopardy.
Although the pandemic intensified the problem of too few personnel to provide services in homes or community settings (and in nursing homes as well, although waiver services don’t normally apply in that setting), it had been ongoing prior to that. Essentially, wage inflation, which skyrocketed because of increased demand during the pandemic but also pushed higher by the debt binge courtesy of Washington Democrats that unleashed general price inflation, has left states much less capable of enticing care workers into home and community settings.
Louisiana’s disabled have been hard hit in this fashion, but aside from a couple of tepid funding boosts trying to entice contractors to hike wages the Edwards Administration has put far more effort into throwing services at the able-bodied and generally healthy population than in trying to address the needs of the most vulnerable. Imagine the huge difference that devoting even a fraction of the money currently unnecessarily being blown on expansion towards paying more competitive nursing wages could make for the state’s disabled where an inadequate amount of care makes a difference not just in quality of life of, but also in the survival of people with disabilities.
But that’s the legacy Edwards will leave with state spending rising 45 percent while he has been in office while inflation, even with Democrats’ boosting of it, increased only 27 percent, and leaving the state’s most vulnerable citizens worse off. That’s because relative to the population there aren’t many disabled and few who vote, as opposed to the masses the political left tries to buy votes from through policies of wealth redistribution, like expansion. And the fiscal state in which he will leave the state looks to make life even worse for those most vulnerable.
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