The financial shell game that defines Louisiana’s foray into Medicaid expansion intensifies today, ringing in another fiscally unhappy New Year for the state’s citizens.
Gov. John Bel Edwards and his administration miss no chance to claim his decision to expand Medicaid saved the state money this fiscal year. They also claim additional general fund savings forthcoming in fiscal year 2018, even though the state’s proportion of the total cost more than doubles.
But the ugly truth is that such “savings” come at high costs to families, due to the financing mechanism attached to the program. Of course, through increased federal taxes and/or assumption of a larger deficit, Louisianans already pay the federal government’s share of the extra spending due to expansion, regardless of any policy made at the state level to fund their state’s portion.
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However, citizens also pay specifically to finance Edwards’ choice. Last year, Edwards and the Legislature increased almost 150 percent the tax rate paid by providers per health care policy issued. Insurers will pass along this increase starting in 2017 as reflected in the 6 to 9 percent hike in next year’s small group premium rates and in increases averaging 27 percent for the individual health insurance exchange rates, in which small businesses also participate.
Those higher rates also incorporate another indirect tax on the people taking effect in 2017, when many hospitals in Louisiana start charging a “sick tax” initiated by the state because, beginning in 2017, it must pay some expansion costs (the federal government picked up all expenses through 2016, halfway through the state’s fiscal year). Providers must compensate the state for charges attributable to the expanded Medicaid clients that they treat. These charges get passed on to consumers and insurers.
It’s not the first time the state has toyed with a sick tax. Just before the hurricane disasters of 2005, former Gov. Kathleen Blanco pushed a version through a compliant Legislature in order to capture more revenue. It potentially could have proved so burdensome that they repealed it before it even could take effect.
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We can’t expect repeal of the current version because it props up the increased spending on Medicaid expansion. Although Health Secretary Rebekah Gee crowed to lawmakers during preliminary budget hearings that, because of expansion, total general fund spending would decrease $41 million in fiscal year 2018, she downplayed the extra $223 million in spending from statutory dedications and fees. Those added dollars largely reflect the increased indirect taxation foisted on the public through increasing the levy on premiums and implementing the sick tax.
Contrary to what the Edwards Administration might have you believe, insurers and hospitals don’t have money trees in their backyards. We (forced by law to have health insurance) pay the difference not just with higher rates but in footing part of the fatter bill for state and local government employees’ insurance and for the entire amount of increased health care subsidies to lower-income individuals. On top of that, many health care consumers also will have higher deductibles and/or out-of-pocket costs attributable to this new taxation.
The Edwards Administration will try to con you into thinking you can have your cake and eat it too, that expansion provides health insurance without costing the citizenry more. Wrong. It’s just another vehicle for wealth redistribution in a form that de-emphasizes individual responsibility and produces health outcomes no better than experienced by the comparable uninsured population. Thus, our New Year’s resolution on this matter should be to hope that Congress and Donald Trump abolish this new entitlement in its present form.