APPEL: On Medicaid Expansion, Obamacare And Policy Sustainability

With all the discussion of Medicaid expansion and Obamacare I want to take a moment to express some of my thinking.

Since the early 20th century, entitlements have become a way of life in our nation. On a large scale, Social Security, Medicare, and Medicaid are mechanisms that transfer wealth from one segment of society to another in order to accomplish certain goals. These goals were clearly understood and accepted by the citizens at the onset and all were designed as limited social safety nets; Social Security to provide basic pension security, Medicare to provide healthcare for the elderly, who generally have little income, and Medicaid to provide basic healthcare for women and children again who have little or no income.

These programs, all created very modestly, have exploded in size and have two things in common; they have become ingrained in the psyche of American citizens and they are passionately defended as programs that the people simply must have in order to survive. The problem these programs have is that they have as noted they have grown disproportionately as to their original intent. As such they are not sustainable without subsidy, truly if it be said, phony subsidy, created by the conjuring, out of thin air, of debt by the national government. In plain terms there is no fiscal sustainability in these transfer schemes and as a result these programs would collapse under a requirement of a national balanced budget.

So in effect we Americans are ignoring reality and are saddling our children with a fiscal disaster that we all hope will not occur in OUR lifetime!

Unlike the ability of the Federal government to “create” phony funding, states do have to meet balanced budgets. Medicaid expansion in our state contains contractual requirements that were accepted by our governor without any input from the legislature or without any attempt by the administration to negotiate terms that would have mitigated the impact of Federal strings. Louisiana’s version of Medicaid contains many strings that embrace extremely expensive Federal requirements and rules, not the least of which is an ultimate funding match rate of 10% of cost. The governor’s unilateral expansion followed President Obama’s vision of moving Medicaid way beyond the original intent of Congress to just protect women and children. In effect Medicaid has cascaded from a program to protect a small segment of society into a major step toward universal socialized medical services for all.

Ok, I won’t get into a debate about why our governor accepted Obama’s program without any attempt, as other states did, to negotiate better terms for Louisiana or if there really is any significant benefit to our citizens from an expansion in a state that has had “Charity” care for decades. I will point out that as we know it today there are major fiscal problems with healthcare for the low income in our state.

Simply put, currently – subject to the whims of the Federal government, the delivery of medical services for Louisiana’s poor eats up 47% of our entire budget, growing about $2 billion just last year. In a democracy that may be perfectly acceptable to the citizens and therefore not an issue. But the people must have a clear understanding of what that means.

Due to the exponential growth of Louisiana’s healthcare spending and linked to the requirement of a balanced budget we are literally watching funds for education, infrastructure, criminal justice, and all other state programs just shrink away.

Ironically this is happening in a time when we don’t have a real grasp on what all this healthcare spending is getting us; we have not been given any big-picture concept of what it all goes to or where it all ends. Instead we are fed hyperbole about people dying in the streets if we don’t just pour more and more money into healthcare spending.

Now many from the liberal side of the spectrum propound that we must just spend more and more and that we must get the funds by raising taxes on citizens and businesses. Just to be clear, the people of our state have loudly spoken; no new taxes, live within our means!

So there it is, an unplanned healthcare system for the low-income the insatiable appetite for funding of which has run up against that political reality that the people don’t trust government and they refuse to accept more taxes.

So what is to be done?

Well, before anything else we must have an understanding on what will come from Washington, as they too grapple with the exploding cost of the healthcare entitlement they have allowed to grow far larger than what was originally intended. Beyond whatever happens in DC, good practice dictates that a few simple things must be accomplished in our state.

The administration must stop the practice of business as usual and undertake to design a comprehensive structure of healthcare delivery. That design cannot be just assuming that ever-growing funding is the solution for all problems. Like any successful plan in order to create this strategy we must first establish goals of those outcomes we expect, the extent and availability of funding, and how all the public and private elements of healthcare delivery would work within the overall strategy. Then we must review all of the programs that exist today against a few extraordinarily basic criteria; are they effective, are they efficient, are they duplicative, and are there better ways of delivering services.

Fundamental design of a critical multi-billion dollar element of state government is just good management practice, practice that has been accomplished in many states that do a good job in healthcare delivery. For whatever reasons, and I assume that they are based in politics, we have never seen in Louisiana a clear plan or a vision of where we need to go. Instead the admonition, based upon hyperbole, is as we have heard so many times: the health of our people will be devastated unless we pour in more and more money. The result is as should be expected: funding is eating up our budget and, from the testimony of many, we are not delivering serves very effectively.

Healthcare for the poor is a fundamental goal for our state. Doing so in an effective and efficient way is our obligation. Nothing must be sacred as we create and execute our plan, but even such a fundamental strategy to accomplish our goals will not occur if there is no commitment from the administration, just as there has been no commitment from previous administrations.

As we know so well, politics over good practice is a sure path to failure.


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