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Louisiana Lawmakers Fail in Effort to Contain Medicaid Expansion Costs

June 22, 2016
By Ben Johnson

The Louisiana State Legislature failed to advance two Republican-sponsored bills designed to limit the cost of Gov.

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The Louisiana State Legislature failed to advance two Republican-sponsored bills designed to limit the cost of Gov. John Bel Edwards’ (D) unilateral expansion of Medicaid under the Affordable Care Act, which will add more than 300,000 people to the state’s program.

Non-expanded Medicaid cost Louisiana $7.4 billion, plus administrative expenses, in 2014, according to the Kaiser Family Foundation. Most of the cost of expanding the program will be paid for by the federal government on a declining annual basis.

Edwards expanded Medicaid by executive order on January 12. More than 175,000 people had enrolled in the new program by June 1, the date the Louisiana expansion took effect, WDSU-TV reported.

State Rep. Barry Ivey’s (R-Baton Rouge) proposal, House Concurrent Resolution 4, would have allowed the legislature to request a waiver to disenroll the most affluent Medicaid expansion participants at a rate proportional to reductions in federal reimbursements for the program.

Rep. Jack McFarland’s (R-Jonesboro) bill, House Bill 492, would have charged Medicaid expansion enrollees an $8 copay for using the emergency room for nonemergency services and choosing to use brand-name drugs when less expensive generics are available.

The bills stalled in committee after contentious hearings, NOLA Media Group reported on April 7. The legislature’s regular session adjourned on June 6 and immediately entered a special budget session scheduled to adjourn June 23.

‘Pig in a Poke’

Ivey says the federal government lures states into long-term dependence by temporarily bearing most of the costs of Medicaid expansion.

“For a Southern boy, it was a pig in a poke,” Ivey said. “It was this very large incentive to get in and accept all these individuals.”

Ivey says the state is heading for a bait-and-switch after 2020, when the federal reimbursement rate for Medicaid expansion is scheduled to decrease to 90 percent.

“That’s just long enough for people to feel like it’s an entitlement,” Ivey said. “I want them to be fully aware that this is not a permanent entitlement. If federal funding is diminished beyond what we can afford to absorb, there [would] be a process [under Ivey’s bill] to take them off of the rolls.”

Copays to Promote Responsibility

McFarland says his bill would have reduced Medicaid expansion costs by diminishing the use of emergency rooms, the most expensive point of health care delivery.

“We can’t afford to have people use public health dollars for simple sniffles and sore throats that can easily be treated outside of the emergency room,” McFarland said. “These copays will allow for people to go to the doctor more responsibly while saving the state money in the future.”

A 2013 report issued by the Indiana Family and Social Services Administration found its system of copays reduced Medicaid recipients’ use of emergency rooms for routine medical conditions.

Ivey says Medicaid expansion could further strain the state’s already overloaded health care infrastructure.

“Unfortunately, sometimes our emergency rooms can be inundated with situations that aren’t really emergency room-related,” Ivey said.

Medicaid expansion creates “more of a bottleneck to see physicians,” Ivey says.

Yielding to Temptation

Kevin Kane, president of the Pelican Institute for Public Policy, says state lawmakers turned to Medicaid expansion as a federal bailout to help balance Louisiana’s budget.

“The state budget is such a mess that anything that looks like free money from the federal government is almost impossible to resist,” Kane said. “The priority for the governor and legislators has been filling the budget shortfall, and Medicaid dollars are seen as a quick way to help make that happen. After Mississippi, Louisiana is the state most reliant on federal dollars, so it is not surprising to see the state take this approach.”

Ivey says Louisiana cannot absorb 10 percent of the Medicaid expansion costs in the event Congress reduces the federal reimbursement rate by that amount in the future, as currently is the plan.

“The legislature will be faced with raising taxes to the tune of hundreds of millions,” or it will have to take the expansion participants off of Medicaid, Ivey said.

Ben Johnson (therightswriter@gmail.com) writes from Stockport, Ohio.

Internet Info:

James A. Richardson, Jared J. Llorens, and Roy Heidelberg, Medicaid Expansion, Budgetary Projections, and Impact on Hospitals, Louisiana Public Health Institute, January 2016: https://www.heartland.org/publications-resources/publications/medicaid-expansion-budgetary-projections-and-impact-on-hospitals?source=policybot

 

Healthy Indiana Plan 1115 Waiver Extension Application, Indiana Family and Social Services Administration, April 12, 2013: https://www.heartland.org/publications-resources/publications/healthy-indiana-plan-1115-waiver-extension-application?source=policybot

 

The Louisiana State Legislature failed to advance two Republican-sponsored bills designed to limit the cost of Gov. John Bel Edwards’ (D) unilateral expansion of Medicaid under the Affordable Care Act, which will add more than 300,000 people to the state’s program.

Non-expanded Medicaid cost Louisiana $7.4 billion, plus administrative expenses, in 2014, according to the Kaiser Family Foundation. Most of the cost of expanding the program will be paid for by the federal government on a declining annual basis.

Edwards expanded Medicaid by executive order on January 12. More than 175,000 people had enrolled in the new program by June 1, the date the Louisiana expansion took effect, WDSU-TV reported.

State Rep. Barry Ivey’s (R-Baton Rouge) proposal, House Concurrent Resolution 4, would have allowed the legislature to request a waiver to disenroll the most affluent Medicaid expansion participants at a rate proportional to reductions in federal reimbursements for the program.

Rep. Jack McFarland’s (R-Jonesboro) bill, House Bill 492, would have charged Medicaid expansion enrollees an $8 copay for using the emergency room for nonemergency services and choosing to use brand-name drugs when less expensive generics are available.

The bills stalled in committee after contentious hearings, NOLA Media Group reported on April 7. The legislature’s regular session adjourned on June 6 and immediately entered a special budget session scheduled to adjourn June 23.

 

‘Pig in a Poke’

Ivey says the federal government lures states into long-term dependence by temporarily bearing most of the costs of Medicaid expansion.

“For a Southern boy, it was a pig in a poke,” Ivey said. “It was this very large incentive to get in and accept all these individuals.”

Ivey says the state is heading for a bait-and-switch after 2020, when the federal reimbursement rate for Medicaid expansion is scheduled to decrease to 90 percent.

“That’s just long enough for people to feel like it’s an entitlement,” Ivey said. “I want them to be fully aware that this is not a permanent entitlement. If federal funding is diminished beyond what we can afford to absorb, there [would] be a process [under Ivey’s bill] to take them off of the rolls.”

 

Copays to Promote Responsibility

McFarland says his bill would have reduced Medicaid expansion costs by diminishing the use of emergency rooms, the most expensive point of health care delivery.

“We can’t afford to have people use public health dollars for simple sniffles and sore throats that can easily be treated outside of the emergency room,” McFarland said. “These copays will allow for people to go to the doctor more responsibly while saving the state money in the future.”

A 2013 report issued by the Indiana Family and Social Services Administration found its system of copays reduced Medicaid recipients’ use of emergency rooms for routine medical conditions.

Ivey says Medicaid expansion could further strain the state’s already overloaded health care infrastructure.

“Unfortunately, sometimes our emergency rooms can be inundated with situations that aren’t really emergency room-related,” Ivey said.

Medicaid expansion creates “more of a bottleneck to see physicians,” Ivey says.

 

Yielding to Temptation

Kevin Kane, president of the Pelican Institute for Public Policy, says state lawmakers turned to Medicaid expansion as a federal bailout to help balance Louisiana’s budget.

“The state budget is such a mess that anything that looks like free money from the federal government is almost impossible to resist,” Kane said. “The priority for the governor and legislators has been filling the budget shortfall, and Medicaid dollars are seen as a quick way to help make that happen. After Mississippi, Louisiana is the state most reliant on federal dollars, so it is not surprising to see the state take this approach.”

Ivey says Louisiana cannot absorb 10 percent of the Medicaid expansion costs in the event Congress reduces the federal reimbursement rate by that amount in the future, as currently is the plan.

“The legislature will be faced with raising taxes to the tune of hundreds of millions,” or it will have to take the expansion participants off of Medicaid, Ivey said.

 

Ben Johnson (therightswriter@gmail.com) writes from Stockport, Ohio.

 

Internet Info:

 

James A. Richardson, Jared J. Llorens, and Roy Heidelberg, Medicaid Expansion, Budgetary Projections, and Impact on Hospitals, Louisiana Public Health Institute, January 2016:

https://www.heartland.org/policy-documents/medicaid-expansion-budgetary-projections-and-impact-hospitals

 

Healthy Indiana Plan 1115 Waiver Extension Application, Indiana Family and Social Services Administration, April 12, 2013: https://www.heartland.org/policy-documents/health-indiana-plan-1115-waiver-extension-application

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