Rather than trepidation, Louisiana’s most health-vulnerable residents should feel elation that the Republican Congress is talking about changing Medicaid reimbursement rules for states.
As part of federal government right-sizing discussions, the GOP-led House of Representatives aims to cut $880 billion over the next decades in costs that include Medicaid. Even after accounting for non-Medicaid spending and waste reduction—which anyone familiar with the system knows is significant—the federal Medicaid budget would still need to shrink to meet this goal.
A key proposal involves shifting Medicaid to block grants, giving states greater latitude over how funds are spent. This would allow for better targeting of resources toward those most in need, rather than spreading funds inefficiently to those with less urgent or no real need.
One very obvious change would be, as was known must happen eventually a dozen years ago, to end the sweetener to suck in states to expansion. For the regular abled adult population, before the (misnamed) Affordable Care Act (ACA), the federal government determined Medicaid reimbursements through the Federal Medical Assistance Percentage (FMAP), covering most Medicaid recipients. Louisiana has historically received one of the highest FMAP rates, set at just over 68 percent for 2025—meaning the state covers less than a third of costs for traditional Medicaid recipients (those earning 0-25 percent of the federal poverty level, or $15,650 for a single person).
But when the Supreme Court ruled expansion–designed to cover abled adults from the 25 to 100 percent range of the FPL (technically 138%, but most above 100% opt for marketplace insurance due to its flexibility)–was optional for states, the 90 percent match for that range under expansion became a disingenuous and perverse incentive. Think about it: states would receive more money to pay for insurance for those more able to pay for it on their own, and more than for their lowest income abled adults, children, and even for their least healthy special needs populations. This funding distortion highlights the hypocrisy of the political left behind the ACA and exposes its real intent: not to improve health care access, but to expand Medicaid dependency, making future cuts politically difficult by tying more people to government assistance.
A reckoning is now here. If the federal government lowers the expansion FMAP to the regular level, Louisiana’s Medicaid costs would skyrocket. Based on recent annual data, the state already pays $500 million for its 10% expansion match—a burden that would jump to $1.583 billion, an extra $1.088 billion. For perspective, that increase nearly equals the entire cost of Louisiana’s waiver programs, which serve moderate-to-severely disabled residents. Scrapping expansion would free up resources for those who truly need state-funded care.
And contrary to expansion advocates’ claims, cutting expansion wouldn’t significantly impact health outcomes—or Louisiana’s overall health ranking, which hasn’t improved since expansion began. The problem? Expansion was supposed to increase delivery of health care; instead, it only expanded access that didn’t make delivery much more attainable. Since Medicaid reimbursement rates are unappealing, provider expansion, especially in specialized medicine, hardly followed suit, thus increasing wait times for all Medicaid patients to see both scheduled and emergency care. The two are related, because the selling point of expansion was it would gravitate people without insurance away from emergency rooms and uncompensated care. Instead, many of the now-insured kept going to the ER for primary care, driving up costs further and causing hospitals to lose money faster.
Louisiana’s historical reliance on charity hospitals meant it had one of the highest uncompensated care burdens in the country, and while after expansion these went down, Medicaid treatment losses more than outstripped that. This especially has been troublesome for smaller and/or rural hospitals, which is why big hospital chains stump for expansion for its rent-seeking benefits—absorbing losses while smaller competitors struggled to survive.
And, a substantial portion of those having wealth transferred to themselves by expansion could, if not did, afford it. Studies show 43 percent of expansion enrollees either switched from private insurance or would have–a figure rising to 56 percent among working individuals. This crowding-out effect hurt hospitals by reducing the share of higher-paying private insurance, and more generally has caused the imbalance with providers that discourages expanding the practicing medicine supply.
Yet, the stenography that typifies media coverage of the issue swallows the leftist tall tales, insisting expansion saves money and improves health outcomes, while fearmongering that Medicaid cuts would hurt special needs populations worse–allegedly because waiver programs and optional services would be cut. In reality, block grants would protect waiver programs and optional services, ensuring funds go where they’re most needed–where in fact people with disabilities utilizing Medicaid would benefit. In Louisiana, dumping expansion could redirect $500 million toward higher reimbursement rates, easing the severe nursing shortage in the New Opportunities Waiver program, where many clients receive far fewer hours of services than they need and to which they are entitled.
Republicans in Congress are on the right track. Medicaid expansion should match regular FMAP rates, and all funding should shift to block grants. If that happens, Louisiana should exit expansion, using savings to better serve those in genuine need.