As the old saying goes, when you’re in a hole, stop digging. Unfortunately, Gov. John Bel Edwards keeps digging Louisiana’s fiscal hole deeper, looking for tax increases to “solve” the state’s fiscal shortfall. He should instead examine the massive Medicaid expansion under Obamacare, the spending on which will only add to Louisiana’s budgetary woes.
Only two years ago, Edwards took office pledging that expanding Medicaid to able-bodied adults — that is, adults of working age without dependents — would see “only” 300,000 individuals added to the government health care rolls. Then, within weeks of taking office, Gov. Edwards revised his numbers upward, claiming that expansion could cover up to 450,000 individuals. But by November 2017 — less than eighteen months after the expansion took effect in Louisiana — the state had already exceeded the maximum number of individuals ever projected to enroll in the program.
Louisiana’s explosion in Medicaid enrollment should not come as a surprise, as dozens of other states face the same problem. According to a November 2016 study by the Foundation for Government Accountability, in 24 states that expanded Medicaid, enrollment exceeded maximum projections by an average of 110 percent.
Unfortunately, this enrollment explosion puts Louisiana’s budget situation in even greater peril. State officials admitted in 2016 that enrollment exceeding 300,000 would reduce the supposed “savings” from Medicaid expansion. As enrollment has now exceeded the higher projection of 450,000, costs will rise.
Other states that expanded Medicaid before Louisiana have faced similar problems, with rising spending on Medicaid crowding out other important budgetary priorities. One Democratic legislator from New Mexico noted that “The most vulnerable of our citizens — the children, our senior citizens, our veterans, individuals with disabilities — I get concerned that those could be areas that get hit” because of Medicaid expansion.
Medicaid expansion could indeed hurt vulnerable citizens, because it prioritizes the needs of able-bodied adults. Even as Louisiana expanded Medicaid to the able-bodied, the state’s Department of Health advertises a seven-year — yes, seven-year — wait for individuals with developmental disabilities to be evaluated for personal care services. Any state’s policy that prioritizes coverage of able-bodied adults, yet makes the most vulnerable individuals wait for years and years to receive care, needs a major re-assessment.
As a new Pelican Institute paper makes clear, Louisiana should start phasing out the Medicaid expansion to the able-bodied — both to right the fiscal ship and to right the state’s wrong priorities. The state should freeze enrollment in expansion, allowing those currently participating in the program to remain so long as they stay eligible, while transitioning people into employer-sponsored insurance or other coverage as they lose Medicaid eligibility. One study found that this policy, if implemented nationwide, could save states between $56 billion to $64 billion, while generating additional savings for federal taxpayers.
As the state winds down its expansion, lawmakers should work with federal policymakers to develop a comprehensive waiver program to reform Medicaid in Louisiana. Such a waiver program could include work requirements, to accelerate the transition from welfare to work. But it should also include improvements in care management — providing better care to beneficiaries, and home-based care where possible. Reforming Medicaid could encompass other important elements, including incentives for wellness and healthy behaviors, better coordination with employer-based insurance where applicable, and improved program integrity to crack down on Medicaid fraud.
Louisiana has suffered enough from the near-constant turmoil of annual budget crises. Instead of digging deeper with more taxes and spending, lawmakers should put down their spades, and freeze enrollment in Medicaid expansion. Once they have done so, the state can work to build the reformed and modernized Medicaid program Louisiana desperately needs.
Chris Jacobs is a senior fellow with the Pelican Institute, and founder of Juniper Research Group, a policy consulting firm.