Even as the Louisiana Legislature edged closer this year to embracing the folly of Medicaid expansion, the data continue to pile up underscoring how its adoption it would lay waste to future state budgets.
As time has passed, states that already unwisely went the expansion route now project nasty surprises on the cost side. It seems practically all of them underestimated the number of people who would enroll in this government health care insurance for people whose family incomes are between 25 and 138 percent of the federal poverty limit, including both those who previously had no insurance and relied upon free care billed to the government and those who dropped their private insurance to sign on. As a result, several states now want to abandon expansion to prevent the cutting of other essential services, as by 2017 they will begin to pay for part of the effort, with their portion of the match leveling off at 10 percent by 2020.
When a court decision made the decision to expand optional, Louisiana commissioned a study to determine costs and benefits to the state. The initial report showed that in the 2014-2023 period, under the most pessimistic assumptions, expansion would cost the state $1.71 billion. With more data a year later, that figure got bumped up to $2.08 billion. Now it turns out, given the experiences of other states, that this figure likely is too optimistic. By fiscal year 2023, the additional cost to the state of expansion would be more than $400 million a year, growing at more than 10 percent annually.
And, as it turns out, essentially for nothing. Data from the Oregon Health Insurance Experiment study show that, in comparing outcomes of the uninsured Medicaid expansion-eligible population between those remaining uninsured with those who participated in Medicaid, their health results, at best were no different. On many indicators, the continuing-uninsured population did better. In fact, the population that enrolled in Medicaid utilized health care more wastefully than the one that did not. Health insurance is not the same as health care, and having the former does not guarantee improvement of the latter, because of lifestyle choices and health care utilization habits.
Despite these inconvenient facts, expansion is pushed because of dubious studies that claim expansion will create jobs and economic development. But these studies are bogus because in their calculations they fail to account for the impact of removing the extra dollars from the economy to finance health care provisions, regardless of what could be more efficient use of those funds. The absurd logic of this becomes palpable when extended: If taking dollars from people that they could invest and spend elsewhere in order to finance more government health care insurance that increases health care utilization, which is then supposed to create jobs and economic activity, why not tax people at 100 percent and spend it all on health care for even more employment and growth?
Medicaid expansion promises higher taxation and/or reduced spending in other areas of need while failing to improve health care outcomes of the target population. It’s a no-brainer to reject it. Yet the Legislature this spring stupidly authorized a mechanism for officials early next year to decide whether to charge many hospitals a fee to fund Medicaid expansion. The cost would then be passed along by jacking up prices reflected in higher out-of-pocket costs and in increased premiums for insurance ratepayers.
Hopefully, after this fall’s state elections, Louisiana’s leaders will realize the best thing for the entire citizenry, taxpayers and the health care uninsured alike means staying the course and declining to implement this unnecessary sick tax.
Jeff Sadow is an associate professor of political science at LSU in Shreveport, where he teaches Louisiana politics. He is author of a blog about Louisiana politics (www.between-lines.com) and, when the Louisiana Legislature is in session, another about legislation (www.laleglog.com). His views do not necessarily express those of his employer.