APPEL: A Report From The Trenches – Medicaid Expansion

I plan to post reports on issues of interest as they arise during this session of the legislature. My first report comes out of a Finance Committee hearing on a Medicaid bill by Sen. Sharon Hewitt (SB 182).

We all know that our governor is a big proponent of Medicaid, having unilaterally expanded Medicaid to cover about 1/3 of the population of Louisiana. What came out today was a simple analysis of the growth of the cost of Medicaid that has been imposed on the taxpayers of Louisiana. As reported by the Department of Health, based upon the current trajectory, within two years Medicaid will cost us about $1 billion more per year than today. It is estimated that the direct cost to the taxpayers of Louisiana would be $100 million per year while the Federal cost share would be $900 million per year.

This cost growth trajectory is expected to continue unabated, so in four years the state taxpayers will be paying $200 million more per year and so on. In ten years Louisiana taxpayers will be paying $1 billion per year more than today, money that will not be available for education, infrastructure, and so on. And there is no end in sight to this growth.

This doesn’t count the obvious fact that Louisianans pay federal taxes as well as state taxes, so the explosion in Medicaid costs paid for by federal dollars is also a cost we will pay.

Unfortunately it’s worse – as there is a big “IF” in this analysis. If, as is likely, the Federal government finally wakes up to the out-of-control cost of socialized medicine, it may well increase state participation levels by cutting the Federal share. The result would be an unsustainable compounding of the burden on the Louisiana taxpayer.

Ironically in his session opening speech Monday we once again heard the governor repeat how his expansion of Medicaid was saving money. I suppose, using some creative math from an alternative universe, that may be true to his supporters. However the facts are that we know that we are spending $1 billion more per year today on Medicaid – that’s the state-funded portion of the program – than we did in Bobby Jindal’s last budget. Add to that we know that we will be facing constant massive growth from Medicaid alone, and that doesn’t take into account of the rest of the budget of the Department of Health. You may say his words were misleading at best, certainly they bore no basis upon which to say that we are saving anything.

Now if anyone is connecting the dots, you will note that it may not be coincidence that concurrent with expansion of Medicaid we are facing a $1 billion shortfall this year. From where we are here in the trenches the main point we conclude is that the Fiscal Cliff is a phony metaphor to cover up spending growth. In fact we cannot but believe that due to Medicaid costs alone our state budget will be under siege EVERY year as far as we can see into the future.

If you listened closely to the governor’s original demand to fix the Fiscal Cliff this year it was for $1 billion in new taxes; but not just any taxes, taxes that had growth potential. As we know that didn’t happen and so with the loss of his ever growing tax scheme, the governor’s plan now seems to be a fix the short term shortfall with just any kind of new taxes during his first term coupled with the hope that we ignore the growth of Medicaid spending as it expands into the future. To those outside the trenches, the takeaway of sweeping Medicaid spending growth under the rug is the reality of ever-recurring Fiscal Cliffs every year or so along with declining funds for other important state priorities.

The only hope that we have to stem unsustainable spending that is misaligned to income is that somehow we can throttle out of control healthcare costs. This is probably the most important though unspoken issue of this entire session.

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