SADOW: LDH Puts Out Another Bogus Report Claiming The Benefits Of Medicaid Expansion

Another year, another swing-and-miss. But in this election year, Democrat Gov. John Bel Edwards needs all the propaganda talking points he can get.

Last week, the Louisiana Department of Health released the next iteration of its claim that Medicaid expansion brought the state pecuniary benefits. It alleges that the move by Edwards in early 2016 since has produced 14,000 jobs and for fiscal year 2018 $84 million in state tax receipts, and $61 million in local tax receipts.

This built upon last year’s substantially flawed effort and, as the Pelican Institute’s Chris Jacobs noted, did manage to correct some of its previous shortcomings. Still, Jacobs observed, problems remained that likely overstate these presumed benefits. Most disturbing among these, the new edition apparently fails to incorporate the impact of wholesale shift from private insurance to expanded Medicaid, estimated at a bare minimum as a third of the expansion population and far above the estimate LDH publicly propagates. Jacobs also faults the authors for a lack of transparency in their failure to explain seemingly odd conclusions, such as their jobs created estimate fell by around 5,000 even though overall spending year-over-year increased. (He could have added wonderment that the supposed extra tax receipts fell from the FY 17 estimate of $103 million at the state level and $75 million at the local level.)

Regardless, hidden in plan view are a couple of data points that put to rest any argument that expansion has provided net taxpayer benefits. First, the authors estimate that the state’s share of extra costs for expansion in FY 2018 reached $128 million – pretty close to the 4.5 percent blended rate of the $3.066 billion total spent on expansion that year of $138 million. But the state only took in $84 million in extra receipts, and even adding in the local amount (although local governments will have some small extra costs to bear as well, but which are trivial at this scale), that barely breaks even across all governments.

No longer. In fewer than four months, the rate becomes fixed permanently at 10 percent. Assuming the state spends the same amount in FY 2020 – a reasonable guess, given that the Edwards Administration, after having loosened eligibility verification standards upon his entering office, sheepishly tightened these up after unflattering data about improper payment levels surfaced, began culling expansion rolls by the tens of thousands – its share (at a blended 8.5 percent rate) will cost $261 million, and at that same level $307 million in FY 2021.

This unpublicized admission in the report makes it official: Edwards lied through his teeth when he asserted expansion would “save” the state money. According to his own bought-and-paid-for report, this fiscal year likely the boondoggle will cost state taxpayers $177 million extra.

And where does the state get this money to subsidize money-losing expansion? From patients in most state hospitals by a sick tax increased with the triggering of expansion by Edwards, health care insurance policy-holders when that premium tax doubled upon triggering, and taxpayers who also paid for that doubling because able-bodied adults in Medicaid operate through a managed care system by insurers. (As well, taxpayers pony up for portions of state employees’ health premiums subject to the tax.) The estimated impact of these increases exceeds $200 million.

Which leads to the second point: the study, as did its predecessor, looks only at half of the equation. It celebrates the extra federal dough rolling into to the state’s economy as a result of expansion, but refuses to acknowledge paying for all of that with the state share takes something out of the state’s economy (as well as in federal taxes paid by state residents). It’s why the authors seem oblivious that their presumed 14,000 job creation number occurred in an environment where the state gained fewer than 2,000 jobs through Edwards’s term.

In short, draining the Louisiana economy to pay for expansion likely created some jobs while destroying more as Louisianans in the aggregate had fewer dollars available for spending and investing (except for the hundred-thousand plus who switched – although some forcibly when their employers dropped coverage because expansion happened – from private plans to expanded Medicaid) and other state priorities went underfunded because of expansion. It doesn’t seem coincidental that Louisiana has had the nation’s worst economy since Edwards took office and as his first act expanded Medicaid.

Once again, LDH has funded a study intended to shine as good a light as possible on a decision that, despite that intent, inadvertently showed that expansion has cost Louisianans their earnings and damaged their economic prosperity. No doubt in campaigning Edwards will emphasize its cheerleading and do all he can to bury its weaknesses and unintended implications.

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