The good news is the alleged bad news about Medicaid changes is good news for Louisianans.
One reform encapsulated in last year’s One Big Beautiful Bill knocks out a loophole that disfavored Medicare patients over those on Medicaid, increased the number of less-valuable interventions, and distorted private sector pricing. At the tail end of the Democrat Pres. Barack Obama Administration to encourage greater Medicaid enrollment including sucking in states to accept expansion (which Louisiana foolishly followed), the federal government began subsidizing state Medicaid plans to boost rates. Often, states reimbursed at rates below commercial charges and even Medicare’s, which could reduce the supply of providers that would lower the amount of care to the Medicaid population.
This wealth transfer from federal taxpayers to states also was supplemented in most states by allowing them to levy provider taxes and have straight-up government appropriations count as matching monies. These policies facilitated boosting of spending on Medicaid to prop up rates to commercial levels, which could be double or more Medicaid rates. For example, for Louisiana’s managed care organizations that provide insurance for almost all of the non-waiver Medicaid population – the vast majority of Medicaid clients – for hospitals all of state-directed payments, provider taxes, and (for Louisiana State University Health Sciences Center New Orleans) intergovernmental transfers are used to peg Medicaid rates at or near commercial rates.
