The Broken Promises of Louisiana’s Medicaid Expansion

Some in Louisiana want to claim that the state’s expansion of Medicaid to able-bodied adults represents a success story. The facts indicate otherwise. Medicaid expansion has resulted in large costs to taxpayers, significant amounts of waste, fraud, and abuse, and tens of thousands of able-bodied adults shifting from private coverage to government insurance—even while individuals with disabilities continue to wait for care. On issue after issue, Medicaid expansion has massively under-performed its sponsors’ own promises:

The Issue: Enrollment

The Claim: “The Department [of Health] had originally based its projections based on U.S. Census data that counted about 306,000 people as uninsured.” – New Orleans Times-Picayune[1]

The Facts:

  • Even though the Department of Health tried to increase its projected enrollment numbers as soon as it made its first estimate, the expansion population has soared well past even these higher claims.[2]
  • As of April 2019, 505,503 individuals had enrolled in Medicaid expansion—65.2% higher than the Department’s original estimate, and 12.3% higher than the Department’s revised enrollment estimate of 450,000 individuals.[3]
  • Medicaid enrollment has declined slightly since April 2019, but only because the Department of Health removed tens of thousands of ineligible individuals from the rolls that were receiving benefits they likely did not deserve.[4]
  • In the spring of 2019, the Department of Health commissioned several LSU researchers to project Medicaid enrollment in future years. The researchers concluded that participation in Medicaid expansion would bounce back from recent enrollment declines to reach an all-time high this year of 512,142 individuals. The researchers also concluded that Medicaid expansion enrollment would continue to increase in future years. Despite spending a total of $71,120 of federal and state taxpayer dollars on this report, the Department of Health has yet to release it publicly.[5]
  • The fact that the Department of Health cited Louisiana’s uninsured population as only 306,000, and yet enrollment has far exceeded that number, further demonstrates that Medicaid expansion has led residents to drop their private insurance to go on to the government rolls—and encouraged people who do not qualify for subsidized coverage to apply anyway.[6]

The Issue: Costs and Spending

The Claim: “In Fiscal Year 2017, Medicaid expansion saved Louisiana $199 million. Beginning July 1, 2017, these savings are expected to surpass $350 million.” – John Bel Edwards[7]

The Facts:

  • Louisiana’s Medicaid expansion has cost far more than expected, placing a higher burden on taxpayers.
  • In 2015, the Legislative Fiscal Office estimated that expansion would cost around $7.1 billion-$8 billion over five years, or approximately $1.2 billion-$1.4 billion per year.[8]
  • For the fiscal year ended June 30, 2019, Medicaid expansion cost taxpayers an estimated $3.1 billion—more than twice the Legislative Fiscal Office’s original estimates.[9]
  • Because most Louisiana residents also pay federal taxes, shifting spending from the state to the federal government does not “save” Louisianans money. Rather, it means Louisiana taxpayers will continue to pay for this skyrocketing spending, just through their federal tax payments instead of their state tax bills.

The Issue: Fraud

The Claim: “Louisiana Medicaid is tough on fraud….When it comes to getting tough on Medicaid fraud, Louisiana is among an elite group of states leading the way by doing the right thing.” – John Bel Edwards[10]

The Facts:

  • Because Louisiana rushed its way into Medicaid expansion without first building a proper eligibility system, the state has spent hundreds of millions of taxpayer dollars providing subsidized health insurance to ineligible individuals.
  • More than a year after Gov. Edwards made his claim about Medicaid fraud, the Legislative Auditor found that numerous individuals with incomes well above the maximum eligibility thresholds had applied for, and received, subsidized Medicaid benefits.[11] One household sampled in the audit claimed income of $145,146—more than Gov. Edwards’ annual salary of $130,000.[12]
  • Belatedly, the Department of Health finally removed approximately 30,000 ineligible individuals from the Medicaid rolls, including 1,672 individuals with incomes of over $100,000.[13]
  • The Medicaid program spent approximately $400 million less in the fiscal year ended June 30, 2019, in large part due to the disenrollments—suggesting that in prior years, Louisiana taxpayers had spent hundreds of millions per year providing subsidized health coverage to ineligible individuals.[14]

The Issue: Efficient Use of Taxpayer Dollars

The Claim: “I know that any misspent dollar is one that could have paid for health care services for those truly in need. My top priority is to ensure every dollar spent goes toward providing health care to people who need it most.” – Health Secretary Rebekah Gee[15]

The Facts:

  • Internal records indicate that Secretary Gee’s own Department knew that tens of thousands of individuals were dropping private coverage to enroll in government-run Medicaid—yet did little about it.
  • For much of 2016 and 2017, the Louisiana Department of Health compiled data indicating that several thousand individuals per month dropped their existing health coverage to enroll in Medicaid expansion.[16]
  • At the end of 2017, the Department of Health stopped compiling data on the number of people dropping private coverage, claiming the data were inaccurate. However, the Department’s stated reasoning for its action suggests that, to the extent the data were inaccurate, they likely under-estimated the number of people dropping private coverage to enroll in Medicaid.[17]
  • Based on the program’s average cost per enrollee, Medicaid has paid hundreds of millions of dollars per year subsidizing the coverage of people who previously had health insurance.[18] This spending comes over and above taxpayer dollars paid to cover individuals ineligible for benefits, as outlined above.

The Issue: Uncompensated Care

The Claim: “Disproportionate share payments to hospitals have decreased as the uninsured population decreased.” – Louisiana Department of Health[19]

The Facts:

  • Uncompensated care payments to hospitals have remained broadly flat since expansion took effect, and by some measures have actually increased.
  • During the three fiscal years prior to expansion, the state paid an average of $1,039,444,880 to Medicaid providers for uncompensated care—$1,011,324,118 in Fiscal Year 2014, $1,000,502,910 in Fiscal Year 2015, and $1,106,507,612 in Fiscal Year 2016.[20]
  • In the fiscal year ended on June 30, 2019, Medicaid spent an estimated $1,056,458,352 on uncompensated care payments—greater than the average spent on uncompensated care in the three years prior to expansion.[21]
  • The meager $50 million in uncompensated care savings between Fiscal Year 2016 and Fiscal Year 2019 does not even begin to match the more than $3.1 billion annual cost to taxpayers of expansion.[22]
  • Even if the Department of Health wants to claim the modest reduction in uncompensated care from Fiscal Year 2016 to Fiscal Year 2019 as “savings,” that means the Medicaid program is spending approximately $62.03 for every dollar it “saves” in uncompensated care payments.

The Issue: Jobs

The Claim: “An analysis by LSU estimates that Medicaid expansion created more than 19,000 jobs and generated $3.5 billion in economic activity in 2017 alone.” – Health Secretary Rebekah Gee[23]

The Facts:

  • Since Medicaid expansion took effect in July 2016, Louisiana’s economy has created only 2,700 jobs—less than one-seventh of the jobs the LSU study claimed expansion would create.
  • In June 2016, the month before expansion took effect, Louisiana’s non-farm payrolls totaled 1,979,100.[24] According to federal data, as of July 2019 Louisiana’s non-farm payrolls now stand at 1,981,800—a meager increase over more than three years.[25]
  • One year before expansion took effect, in July 2015, Louisiana had nearly 10,000 more jobs (1,991,500) than it does today (1,981,800).[26]
  • Since Medicaid expansion took effect, the total labor force within the state has declined by more than 65,000 individuals, or more than 3%—from 2,161,299 in June 2016 to 2,095,844 today.[27]
  • Within days of the LSU report’s release in April 2018, the Pelican Institute published a rebuttal demonstrating that the LSU researchers likely omitted key facts in their calculations, which meant the study made inaccurate and inflated claims about the fiscal impact of Medicaid expansion.[28]
  • Following an exhaustive series of public records requests with LSU, the university finally admitted that the researchers did indeed omit a key data source from their calculations, leading to inflated claims in their study.[29] While the researchers conceded in one document that their 2018 report “overstate[d] the economic impact of” Medicaid expansion, they have yet to admit this error publicly, and the Department of Health has refused to release the document in which they admitted their error.[30]

The Issue: Vulnerable Individuals Waiting for Care

The Claim: “It’s inconvenient that the facts don’t follow this story. [The Department of Health] ended the wait list for disabilities last year in partnership with the disability community. #Fakenews.” – Health Secretary Rebekah Gee[31]

The Facts:

  • While the Department of Health may have changed the name from a “waiting list” to a “Request for Services Registry,” nearly 15,000 vulnerable individuals continue to wait for access to care.
  • The Department of Health’s own website regarding waiver services includes the following passage: “Waiver services are dependent upon funding, and are offered on a first-come, first-served basis through the Request for Services Registry.”[32] The reference to “first-come, first-served” consideration for waiver applicants clearly indicates that vulnerable individuals continue to wait for care.
  • According to information provided by the Department of Health in response to a public records request, as of May 2019 a total of 14,984 individuals were on the “Request for Services Registry.”[33]
  • Since Medicaid expansion took effect in Louisiana, at least 5,534 individuals with disabilities have died while on waiting lists to access care—more than one-quarter of the at least 21,904 individuals with disabilities nationwide who have died while waiting for services under Medicaid expansion.[34]
  • By giving states a greater federal matching rate to cover able-bodied adults than individuals with disabilities, Obamacare has encouraged state Medicaid programs to discriminate against the most vulnerable individuals in our society.[35]

Medicaid expansion has singularly failed to its advocates’ own promises of success. Louisiana should begin the process of unwinding this failed experiment, and put into practice reforms that can reduce the cost of care for beneficiaries, while focusing Medicaid on the vulnerable populations for which it was originally designed.[36]

 

[1] Kevin Litten, “Louisiana’s Medicaid Expansion Enrollment Could Grow to 450,000,” New Orleans Times-Picayune January 20, 2016, https://www.nola.com/politics/2016/01/medicaid_expansion_500000.html.

[2] Ibid.

[3] Healthy Louisiana Dashboard, http://www.ldh.la.gov/HealthyLaDashboard/; Kevin Litten, “Louisiana’s Medicaid Expansion Enrollment.”

[4] Sheridan Wall, “GOP Legislators Renew Attacks on Medicaid Management as Data Emerges on Misspending,” Daily Advertiser April 9, 2019, https://www.theadvertiser.com/story/news/local/louisiana/2019/04/09/gop-legislators-renew-attacks-medicaid-management-data-emerges-misspending/3418133002/.

[5] Chris Jacobs, “The Report the Department of Health Doesn’t Want You to Read,” Pelican Institute, September 26, 2019, https://pelicaninstitute.org/blog/the-report-the-department-of-health-doesnt-want-you-to-read/.

[6] Chris Jacobs, “What You Need to Know about Medicaid Crowd-Out,” Pelican Institute, May 20, 2019, https://pelicaninstitute.org/wp-content/uploads/2019/05/PEL_MedicaidCrowdOut_WEB-2.pdf.

[7] Louisiana Department of Health, “Louisiana Medicaid Expansion 2016-2017 Annual Report,” http://ldh.la.gov/assets/HealthyLa/Resources/MdcdExpnAnnlRprt_2017_WEB.pdf, p. 2.

[8] Louisiana Legislative Fiscal Office, Fiscal Note on HCR 3 (2015 Regular Session), http://www.legis.la.gov/legis/ViewDocument.aspx?d=942163.

[9] Louisiana Department of Health, “Medicaid Forecast Report: May 2019,” June 10, 2019, http://www.ldh.la.gov/assets/medicaid/forecast/FY19MedicaidForecast-may2019.pdf, Table 3, Expenditure Forecast by Category of Service, p. 2.

[10] Louisiana Department of Health, “Louisiana Medicaid Expansion 2016-2017 Annual Report,” p. 7.

[11] Louisiana Legislative Auditor, “Medicaid Eligibility: Wage Verification Process of the Expansion Population,” November 8, 2018, https://lla.la.gov/PublicReports.nsf/1CDD30D9C8286082862583400065E5F6/$FILE/0001ABC3.pdf.

[12] Ibid., Appendix E, Targeted Selection Individual Medicaid Recipient Cases, pp. 27-29.

[13] Sheridan Wall, “GOP Legislators Renew Attacks on Medicaid Management.”

[14] Melinda Deslatte, “Louisiana Medicaid Spending $400M Less Than Expected,” Associated Press June 12, 2019, https://www.nola.com/news/2019/06/louisiana-medicaid-spending-400m-less-than-expected.html.

[15] Rebekah Gee, “Medicaid Expansion, Fighting Fraud, Equally Important,” Daily Advertiser April 21, 2019, https://www.theadvertiser.com/story/opinion/editorial/2019/04/21/medicaid-expansion-fighting-fraud-equally-imoportant/3534502002/.

[16] Chris Jacobs, “What You Need to Know about Medicaid Crowd-Out.”

[17] Chris Jacobs, “Medicaid Expansion Has Louisianans Dropping Their Private Plans,” Wall Street Journal June 8, 2019, https://www.wsj.com/articles/medicaid-expansion-has-louisianans-dropping-their-private-plans-11559944048.

[18] Chris Jacobs, “What You Need to Know about Medicaid Crowd-Out.”

[19] Louisiana Department of Health, “Louisiana Medicaid Expansion 2016-2017 Annual Report,” p. 7.

[20] Louisiana Department of Health, “Louisiana Medicaid 2016 Annual Report,” http://ldh.la.gov/assets/medicaid/AnnualReports/2016AnnualReport.pdf, Table 3, Medicaid Vendor Payments for Budget Programs by State Fiscal Year, p. 5.

[21] Louisiana Department of Health, “Medicaid Forecast Report: May 2019,” Table 2, Expenditure Forecast by Budget Program, p. 1.

[22] Ibid, Table 3, Expenditure Forecast by Budget Category of Service, p. 2.

[23] Rebekah Gee, “Medicaid Expansion, Fighting Fraud, Equally Important.”

[24] Bureau of Labor Statistics, “Regional and State Employment and Unemployment—July 2016,” August 19, 2016, https://www.bls.gov/news.release/archives/laus_08192016.pdf, Table 5: Employees on Non-Farm Payrolls by State and Selected Industry Sector, Seasonally Adjusted, p. 13. The report for July 2016 reflects final (as opposed to preliminary) data for the June 2016 period.

[25] Bureau of Labor Statistics, “Regional and State Employment and Unemployment—August 2019,” September 20, 2019, https://www.bls.gov/news.release/archives/laus_09202019.pdf, Table 3: Employees on Non-Farm Payrolls by State and Selected Industry Sector, Seasonally Adjusted, p. 10. The report for August 2019 reflects final (as opposed to preliminary) data for July 2019.

[26] Bureau of Labor Statistics, “Regional and State Employment and Unemployment—July 2016,” Table 5, p. 13.

[27] Bureau of Labor Statistics, “Regional and State Employment and Unemployment—July 2016,” Table 3, Civilian Labor Force and Unemployment by State and Selected Area, Seasonally Adjusted, p. 11; Bureau of Labor Statistics, “Regional and State Employment and Unemployment—August 2019,” Table 1, Civilian Labor Force and Unemployment by State and Selected Area, Seasonally Adjusted, p. 8.

[28] Chris Jacobs, “Why Expanding Louisiana’s Program to Able-Bodied Adults Hurts the Economy,” Pelican Institute, April 17, 2018, https://pelicaninstitute.org/policy-brief-debunking-pro-medicaid-report/.

[29] Chris Jacobs, “LSU, Department of Health Inflate Claims in Medicaid Expansion Studies,” Houma Today July 27, 2019, https://www.houmatoday.com/news/20190727/opinion-lsu-department-of-health-inflate-claims-in-medicaid-expansion-studies.

[30] Louisiana State University response to Pelican Institute Public Records Act request, September 23, 2019.

[31] @rebekahgeemd, May 20, 2019, https://twitter.com/rebekahgeemd/status/1130459486307667968.

[32] Louisiana Department of Health Office for Citizens with Developmental Disabilities, “Waiver Services,” http://www.ldh.la.gov/index.cfm/page/142, accessed June 15, 2019.

[33] Louisiana Department of Health, response to Pelican Institute Public Records Act request, May 21, 2019.

[34] Nicholas Horton, “Waiting for Help: The Medicaid Waiting List Crisis,” Foundation for Government Accountability, March 6, 2018, https://thefga.org/wp-content/uploads/2018/03/WAITING-FOR-HELP-The-Medicaid-Waiting-List-Crisis-07302018.pdf.

[35] Chris Jacobs, “How Obamacare Undermines American Values: Penalizing Work, Citizenship, Marriage, and the Disabled,” Heritage Foundation Backgrounder No. 2862, November 21, 2013, http://www.heritage.org/research/reports/2013/11/how-obamacare-undermines-american-values-penalizing-work-marriage-citizenship-and-the-disabled.

[36] Chris Jacobs, “Reforming Medicaid in Louisiana,” Pelican Institute, January 30, 2018, https://pelicaninstitute.org/wp-content/uploads/2018/01/PEL_MedicaidPaper_FINAL_WEB.pdf.