KENNEDY: Just How Real Is This Medicaid ‘Crisis?’

Last spring the Legislature increased the state’s Medicaid budget by $788 million. Don’t take my word for it. According to the Legislative Fiscal Office, “Prior year actual expenditures for Medicaid indicate total actual expenditures of $6.64 B in FY 12. Based on these actuals, the Medical Vendor Payments appropriation reflects an overall increase of $788.3 M, or approximately 11.9%, from FY 12.” (Fiscal Highlights, Fiscal Year 2012 – 2013, Legislative Fiscal Office, p. 92)

So why is there a funding crisis?

One answer, according to some, is that Congress recently eliminated the temporary extra Medicaid money it was giving us because of the hurricanes. Worst case, this will result in a loss of $860 million, including the state match.

However, a look at the historical spending in Louisiana’s Medicaid Program reveals a startling fact: 92% of the reduction in this year’s Medicaid budget caused by the recent loss of federal funds could be absorbed by going back to last year’s budget. That’s correct: this year’s Medicaid budget is $788 million, or 12%, more than last year’s budget. $107 million alone of the increase “is based on an inflation factor of 4.4%, and not growth in the number of actual Medicaid recipients.” (Fiscal Highlights, p. 29). Go back to last year’s level of spending and the current shortfall caused by the recent loss of federal funds is only $68 million.

Here’s what Louisiana taxpayers have spent on Medicaid for each of the past six years:

  • Fiscal Yr. 2007-08 $5.9 billion/1.17 million enrollees
  • Fiscal Yr. 2008-09 $6.4 billion/1.23 million enrollees
  • Fiscal Yr. 2009-10 $6.6 billion/1.30 million enrollees
  • Fiscal Yr. 2010-11 $6.8 billion/1.34 million enrollees
  • Fiscal Yr. 2011-12 $6.6 billion/1.20 million enrollees
  • Fiscal Yr. 2012-13 $7.4 billion/1.25 million enrollees

(Source: DHH Annual Medicaid Reports; Fiscal Highlights.)

Since January 1, 2008, Louisiana Medicaid spending has increased $1.5 billion, or 25%, while the number of Medicaid patients has remained the same. Half of that $1.5 billion increase, or $788 million, was added to this year’s budget. Eliminate the extra spending appropriated in last year’s legislative session and go back to last year’s budget, and the shortfall is a manageable $68 million.

Why was it necessary to increase Medicaid spending so much in this year’s budget? Who received the extra money? How much of the extra spending is really necessary in light of the loss of federal money in our Medicaid Program? Why can’t we get by with last year’s spending levels, like most Louisiana families and businesses are being forced to do? These are the types of questions our Legislature needs to ask, and have answered.

Seen from this perspective, the sky is not falling. Louisiana’s Medicaid “crisis” may not be the exigency that some claim.

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