SADOW: More Proof Of Medicaid Expansion’s Wealth Redistribution

It keeps getting worse for Medicaid expansion in Louisiana as further research fortifies the conclusion that it operates largely as another form of welfare designed to redistribute wealth.

Earlier this month, the Foundation for Government Accountability issued a report highlighting the facet of expansion its advocates desperately don’t want the larger public to know: a significant portion of those made eligible and enrolling in it already had or could afford insurance, and in enrolling merely relieved themselves of that expense which they transferred to taxpayers, many of whom must foot their health insurance out of their own resources. And in that document, Louisiana figured prominently.

That research focused on the segment of the population most likely to take advantage of the sweet deal, those families earning 100 to 150 percent of the federal poverty limit. Any under 138 percent qualify for expansion, but from 100 percent up to that – about 85 percent of the total cohort – they also can qualify to receive (very generous, often on the order of 90 percent or more) premium support to buy insurance through exchanges. However, the law forces them into Medicaid if they qualify for it.

The report included some Louisiana statistics. For this category, Louisiana had the highest proportion of expansion crowding out private insurance (whether subsidized by employers or the federal government) of states measured, a stunning 82 percent. Overall, however, estimates of the entire eligible expansion population – in other words, adding in the 25 to 100 percent FPL cohort – that abandoned private insurance in Louisiana have come in at between 35 and 47 percent, less than the national average of 54 percent.

Likely Louisiana comes in below the average because of its poverty rate close to the nation’s high, meaning fewer people had resources or desire to have had insurance. The extraordinarily high proportion for the FPL 100-138 percent cohort likely comes from the comparatively large income inequality in Louisiana, making for a relatively larger portion of the population that fell into that category that at first could get subsidized insurance first through the exchanges, then for free through expansion.

Note the particular relevance of crowd-out for the dual eligible population for Louisiana. The federal subsidy came from all taxpayers, of which Louisianans pay (according to population numbers) about 1.4 percent, and is around $126 more a month than the state cost of around $523 a month (of which it will pay, starting later this week, 10 percent) per expansion enrollee. Thus, whatever economic benefit comes from an infusion of tax money into the health care sector will fall by $124 per enrollee per month because of this substitution, and the state’s cost rises by over $52 per enrollee per month.


By the numbers with an estimated 78,400 making the switch, this bills Louisiana taxpayers an extra $49 million annually. Keep in mind this is a cost solely because of expansion, and also that this siphons around $117 million from entering the state’s health care sector as opposed to not expanding Medicaid.

Of course, this extra figure makes up just a portion of total additional costs Louisianans must cover for this new benefit. By the numbers, given expected enrollments the total should be close to the last year for which there is data, in 2020 that will cost about $307 million (which includes the cohort with the exchange option). Using the 82 percent crowd-out figure, of all those outside the cohort (that is, having income 25-100 percent of FPL) that comprises 83 percent of the total enrollees, assuming a total crowd-out figure at the midpoint of 35 and 47 percent, roughly 29 percent previously had insurance.

These numbers indicate, at the very least, that Louisiana needs to adopt for at least that 100-150 percent cohort patient responsibility measures for Medicaid that could include premiums and co-payments. Not only would this relieve taxpayer burdens a bit, it also would discourage inefficient over-consumption of medical resources financed by taxpayers. This group in the past largely insured itself, proving its members can make these kinds of payments without undue financial strain.



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