The state received some good news recently when it announced it would spend $400 million fewer on Medicaid, about 3 percent less than budgeted. It identified as a major contributor cleansing the rolls of ineligible recipients, almost all of them coming from Medicaid expansion, through a technology upgrade that allows for more frequent verification. Since then, Edwards Administration officials have all but broken their arms patting themselves on the back for the discovery of (for now) over 30,000 ineligible participants to save the state money, and the public can expect Edwards to repeat that party line ad naseum as he runs for reelection.
But in all this Edwards wishes to bury a dirty secret. The reason why so many erroneous clients, who comprised about six percent of all expansion enrollees, gained illegal access to service is because of two policies that Edwards instituted, by design, that makes it easier for ineligible individuals to enroll.
For one, when taking office Edwards relaxed tougher initial verification standards instituted by his predecessor put in precisely to cut down on an unacceptably-high error rate. Edwards also allowed automatic acceptance into expansion of Supplemental Nutritional Assistance Program enrollees, thereby baking in that program’s 6.3 percent rate of illegal participants. Possibly almost all of the 30,000-plus ejected earlier this year gained access to the program because of these policy changes.
And those facets haven’t changed. The new software permits checking every three months, but does nothing to keep ineligible individuals from enrolling. Only by reverting back to the standards that Edwards altered can prevent picking the pockets of taxpayers of three months of inappropriate payments; his crowing about finding ineligible recipients only tries to hide that fact.
The costs aren’t trivial. The latest data for the expansion population, from mid-2017 or after one year, show an average expenditure of $4,366 per enrollee, or the cost of premium payments to a Healthy Louisiana managed care provider. Since enrollment ramped up from zero to over 470,000 in that time frame, that figure for the year represents payments for only part of the year, understating the actual cost now almost $6,300.
As well, the federal government only asked for an average of 2.5 percent paid by the state in that fiscal year. As such, assuming the 30,000 would have been caught only after a year, the state spent unnecessarily $131 million in FY 2017, of which $3.2 million came directly from state taxpayers.
The situation will change only marginally for the better as long as the lax intake requirements continue, By 2020, the state will pay a 10 percent share. Using today’s $6,280 a year in premium payments and assuming a six percent ineligible figure continues, although discovered after just three months instead of 12, state taxpayers from then on will have Edwards’ decisions cause them to throw away yearly over $4.3 million of their money (and $39 million of federal taxpayer funds).
Of course, this pales in comparison to the money that goes out the door because expansion allows a portion of its enrollees to drop insurance they paid for themselves – either privately or through an employer (or employers chose to jettison them by disbanding their offerings because of rising rates) – and make taxpayers pick up the tab. Some calculations I made using survey data pegged the proportion enrolled in expansion for this reason at 47 percent costing the state $402 million a year; the Pelican Institute using a different but valid methodology computed a figure of 35.5 percent costing $461 million annually. That means in 2020 and beyond state taxpayers directly would cough up $40 million to $46 million yearly through this expanded government benefit.
Thus, decisions made by Edwards – to expand Medicaid with no strings attached (such as co-payments or monthly premiums paid by clients) and to loosen eligibility requirements – will cost Louisianans directly up to $50 million a year to give people something they already paid for themselves or don’t qualify for, plus the portion of federal taxes Louisianans pay to foot the remaining $450 million. Those numbers will decrease significantly only if Edwards no longer lives at 1001 Capitol Access Road after the middle of January.