LA needs trigger law to reckon with inevitability

Louisiana needs to have better preparation for the inescapable future when Medicaid spending meets reality.

With Democrats far out of the mainstream on the issue, with them and their media allies still spreading the falsehood that there are “cuts” to the program over the next few years (when, in fact, the recent budget reconciliation increases spending over the next several years), the state still should prepare itself for reduced federal allocations. The active authorizations moving forward over the next several years assure the state will continue to receive the same federal funding in proportion to the portion of individuals eligible to receive services.

However, if the state is cross-subsidizing Medicaid recipients, that will be inconvenient. That means that the state takes advantage of the cynical and purely political apportionment designed by Democrats when rammed into law of federal Medicaid assistance: the far healthier expansion population has the state paying for only 10 percent of the costs – over $400 million annually at last count in Louisiana – while for the far less healthy adult population receives (varying slightly from year to year) the state must pay around 25 to 35 percent (this year about 32), an arrangement that beggars the less-healthy and provides no better care for all than if they were uninsured. If the latest budgetary changes result in fewer people qualifying for Medicaid – because they were (about a third) ineligible in the first place or they are unmotivated enough to try to qualify – those excess federal dollars from this population can’t be shuttled over to the needier population.

But the real problem could come if some years from now – the most recent budget reconciliation delays reforms, such as the non-demanding community engagement requirement for able-bodied adults without children, to as late as 2029 – that the federal government reduces the 90 percent match of the expansion population. In Louisiana, this drew fretting from even conservatives who should have known better that hundreds of millions of dollars would go missing if the 90 percent was rolled back to the regular rate.

It didn’t happen, this time. But it will. In just the past 15 years, spending on Medicaid has exploded 140 percent, driven in part by a surge in waste, fraud, and abuse (the latest in Louisiana here, but nationally over the past decade equivalent to $4,300 per household). At some point, states that unwisely expanded Medicaid will have the federal government out of necessity tune down that 90 percent reimbursement, possibly to the regular level.

Instead, Louisiana policy-makers can follow the lead of several states that have passed trigger laws to automatically shed Medicaid expansion enrollees if the reimbursement rate ever falls below 90 percent (in a couple of cases, a lower percentage). Ohio became the latest earlier thus summer.

Louisiana should follow suit next legislative session. The ideal law would shed in a month after  the point federal law changes to give the expansion population time to seek out an alternative (over a third did prior to expansion). Since it will take several years for implementation of the recent changes to occur, any move to scale back the 90 percent may take a decade to come forth. But Louisiana needs to be ready for that inevitable day.