There’s both irony and hypocrisy when Gov. John Bel Edwards' administration speaks of a “pretend” budget. Edwards, after all, created “pretend” savings from “pretend” health care.
Instead of legislators finalizing a spending plan in the regular session, Edwards and his people wanted to incorporate into the budget the assumption that tax increases would be enacted in the upcoming special session. When lawmakers didn't bite, the governor and his legislative allies derided it as “pretend.”
Yet part of the gap between funding at Edwards’ preferred level and revenues available without increasing taxes surely comes as a consequence of his decision to expand Medicaid. Before the expansion, $9.5 billion had adequately covered state health care spending. Three years later, $11.3 billion seemingly can’t. First-year expansion costs alone came in $1.4 billion above predictions.
Perhaps to forestall criticism on that point, this spring the administration released a report on expansion’s presumed economic impact. The report purports to show for fiscal year 2017 that state revenues from expansion exceeded costs by $55 million while local governments received an extra influx of $75 million triggered by the large amount of federal dollars received.
Yet that analysis is fatally flawed for several reasons. First, it ignores the fact that tens of thousands of people dropped heavily subsidized exchange coverage to enroll in expanded Medicaid, so they actually brought fewer federal dollars into the state. Nor does it take into account the greater unemployment and resulting reduced economic activity caused by expansion because, for some, acquiring a job or working more would disqualify them from free health care.
Note as well the report discounts the costs of lost economic activity from the tax dollars expansion lifts from people's pockets. It doesn’t factor in the impact of the state’s increased taxes on hospital stays and insurance premiums to pay for expansion, which extract annually hundreds of millions of dollars from the economy, sapping growth — and state revenues. Nor does it account for the stunted economic activity from Louisianans making higher federal tax payments or assuming greater national debt to pay for the massive federal contribution that funds expansion.
That federal share, by the way, will decline according to law. Fiscal year 2017 had a federal match level of 97.5 percent. Setting aside the report’s shortcomings to take its numbers at face value, using the 90 percent match of FY 2022 and beyond produces a forecast of yearly expansion costs outpacing state revenues ostensibly generated from the expansion by $90 million.
A more comprehensive analysis that particularly doesn’t count the tax hikes as “savings” would demonstrate that expansion actually hasn’t “saved” the state money from Day One. “Pretend” savings attributed to Medicaid expansion hide that it made the deficit worse. That might have contributed to Louisiana, during Edwards' term, experiencing the nation's worst rate of economic growth.
More disturbingly, expansion may have cost lives. Every dollar spent by expansion takes a dollar away from supporting Medicaid programs for the disabled. A report from the Foundation for Governmental Accountability, a conservative group frequently critical of Medicaid, notes that from expansion’s start through last year, 5,534 Louisianans on waiting lists for these services died.
Even able-bodied Louisianans are at risk. With Medicaid providers strained by expansion — aggravated by some employers having to drop employee coverage because of increased costs imposed by health insurance “reforms” — the ensuing delays in diagnosis and treatments also make for “pretend” health care.
Typical of liberal Democrats, with expansion Edwards created a fiscal crisis and now wants to take even more of what people earn to compensate for that. That identifies the most significant pretense of all — a governor who pretends to provide quality leadership.
Jeff Sadow is an associate professor of political science at Louisiana State University-Shreveport, where he teaches Louisiana government. He is author of a blog about Louisiana politics at www.between-lines.com. When the Louisiana Legislature is in session, he writes about legislation in it at www.laleglog.com. Follow him on Twitter, @jsadowadvocate or write to firstname.lastname@example.org. His views do not necessarily express those of his employer.