The Tough Cost-Benefit Choices Facing Policymakers Regarding Coronavirus

Right now, the United States, like most of the rest of the world, faces two critical, yet diametrically opposed, priorities: Stopping a global pandemic without causing a global economic depression.

Balancing these two priorities presents tough choices—all else equal, revitalizing the economy will exacerbate the pandemic, and fighting the pandemic will worsen economic misery. Yet, as they navigate this Scylla and Charybdis, some policymakers have taken positions contrary to their prior instincts.

In his daily press briefing Tuesday, Gov. Andrew Cuomo (D-NY) discussed the false choice between the economy and public health. He made the following assertions:

My mother is not expendable, your mother is not expendable, and our brothers and sisters are not expendable, and we’re not going to accept the premise that human life is disposable, and we’re not going to put a dollar figure on human life. The first order of business is to save lives, period. Whatever it costs….

If you ask the American people to choose between public health and the economy then it’s no contest. No American is going to say accelerate the economy at the cost of human life because no American is going to say how much a life is worth.

On this count, Cuomo is flat wrong. Entities in both the United States and elsewhere—including within his own state government—put a dollar figure on human life on a regular basis.

Rationing on Cost Grounds Already Happens

Consider the below statement describing the National Institute of Health and Care Excellence (NICE), a British institution that determines coverage guidelines for the country’s National Health Service (NHS). NICE uses the quality-adjusted life year (QALY) formula, which puts a value on human life and then judges whether a new treatment exceeds its “worth” to society:

As a treatment approaches a cost of £20,000 [about $24,000 at current exchange rates] per QALY gained over existing best practice, NICE will scrutinize it closely. It will consider how robust the analysis relating to its cost- and clinical-effectiveness is, how innovative the treatment is, and other factors. As the cost rises above £30,000 [about $36,000] per QALY, NICE states that ‘an increasingly stronger case for supporting the technology as an effective use of NHS resources’ is necessary.

Entities in the United States undertake similar research. The Institute for Clinical and Economic Review (ICER) also performs cost-effectiveness research using the QALY metric. The organization’s website notes that “the state of New York has used [ICER] reports as an input into its Medicaid program of negotiating drug prices.” In other words, Cuomo’s own administration places a value on human life when determining what the state’s Medicaid program will and won’t pay for pharmaceuticals.

Cost-Effectiveness Thresholds

Cuomo represents but one example of the contradictions in the current coronavirus debate. Donald Berwick, an official in the Obama administration and recent advisor to the presidential campaign of Sen. Elizabeth Warren (D-MA), infamously discussed the need to “ration with our eyes open” While many liberals like him have traditionally endorsed rationing health care on cost grounds, few seem willing to prioritize economic growth over fighting the pandemic.

Conversely, conservatives often oppose rationing as an example of government harming the most vulnerable by placing an arbitrary value on human life. Nonetheless, the recent voices wanting to prioritize a return to economic activity over fighting the pandemic have come largely from the right.

The calls to reopen the economy came in part from an Imperial College London study examining outcomes from the pandemic. The paper concluded that an unmitigated epidemic (i.e., one where officials made no attempt to stop the virus’ spread) would cost approximately 2.2 million lives in the United States. Mitigation strategies like social distancing would reduce the virus’ impact and save lives, but would prolong the outbreak—and harm the economy—for more than a year.

The paper’s most interesting nugget lies at its end: “Even if all patients were able to be treated”—meaning hospitals would not get overwhelmed with a surge of patients when the pandemic peaks—“we predict there would still be in the order of…1.1-1.2 million [deaths] in the US.” Based on the Imperial College model, shutting down the economy so as not to let the virus run rampant would save approximately 1 million lives compared to the worst-case scenario.

A Cost of $1 Million Per Estimated Life Saved

Some crude economic math suggests the value a pandemic-inspired economic “pause” might place on human life. Based on a U.S. gross domestic product of approximately $21 trillion, a 5 percent reduction in GDP—which seems realistic, or perhaps even conservative, based on current worldwide projections—would erase roughly $1.05 trillion in economic growth. The Imperial College estimate that mitigation and social distancing measures would save roughly 1 million lives would therefore place the value of each life saved at approximately $1 million.

Of course, these calculations depend in large part on inputs and assumptions—how quickly the virus spreads, whether large numbers of Americans have already become infected asymptomatically, whether already infected individuals gain immunity from future infection, how much the slowdown harms economic growth in both the short and long-term, and many, many more. Other assumptions could yield quite different results.

But if these types of calculations, particularly when performed with varying assumptions and inputs, replicate the results of the crude math above, policymakers likely will sit up and take notice. Given that Britain’s National Health Service makes coverage decisions by valuing life as worth tens of thousands of pounds, far less than millions of dollars, it seems contradictory to keep pursuing a pandemic strategy resulting in economic damage many multiples of that amount for every life saved.

Tough Cost-Benefit Analysis

Unfortunately, lawmakers the world over face awful choices, and can merely attempt to select the least-bad option based on the best evidence available to them at the time. Slogans like “Why put your job over your grandmother?” or “If you worry about the virus, just stay home” belie the very real consequences the country could face.

Consider possible scenarios if officials loosen economic restrictions while the pandemic persists. Some individuals with health conditions could face the prospect of returning to work in an environment they find potentially hazardous, or losing their jobs. Individuals who stay home to avoid the virus, yet develop medical conditions unrelated to the virus—a heart attack, for instance—could die due to their inability to access care, as hospitals become swarmed with coronavirus patients. And on and on.

The president said on Tuesday he would like to start reopening the economy by Easter, a timeline that seems highly optimistic, at best. If by that time the situation in New York City deteriorates to something resembling Italy’s coronavirus crisis—and well it could—both the president and the American people may take quite a different view towards reopening the economy immediately. (And governors, who have more direct power over their states, could decide to ignore Trump and keep state-based restrictions on economic activity in place regardless of what he says.)

Nonetheless, everyone understands that the economy cannot remain in suspended animation forever. Hopefully, better data, more rapid viral testing, and the emergence of potential treatments will allow the United States and the world to begin re-establishing some sense of normalcy, at the minimum possible cost to both human life and economic growth.

This post was originally published at The Federalist.

Analyzing the Gimmicks in Warren’s Health Care Plan

Six weeks ago, this publication published “Elizabeth Warren Has a Plan…For Avoiding Your Health Care Questions.” That plan came to fruition last Friday, when Warren released a paper (and two accompanying analyses) claiming that she can fund her single-payer health care program without raising taxes on the middle class.

Both her opponents in the Democratic presidential primary and conservative commentators immediately criticized Warren’s plan for the gimmicks and assumptions used to arrive at her estimate. Her paper claims she can reduce the 10-year cost of single payer—the amount of new federal revenues needed to fund the program, over and above the dollars already spent on health care (e.g., existing federal spending on Medicare, Medicaid, etc.)—from $34 trillion in an October Urban Institute estimate to only $20.5 trillion. On top of this 40 percent reduction in the cost of single payer, Warren claims she can raise the $20.5 trillion without a middle-class tax increase.

Independent Report Shows How Socialism Will Raise Your Taxes

Democratic candidates for president continue to evade questions on how they will pay for their massive, $32 trillion single-payer health care scheme. But on Monday, the Committee for a Responsible Federal Budget (CRFB) released a 10-page paper providing a preliminary analysis of possible ways to fund the left’s socialized medicine experiment.

Worth noting about the organization that published this document: It maintains a decidedly centrist platform. While perhaps not liberal in its views, it also does not embrace conservative policies. For instance, its president, Maya MacGuineas, recently wrote a blog post opposing the 2017 Tax Cuts and Jobs Act, stating that the bill’s “shortcomings outweigh the benefits,” because it will increase federal deficits and debt.

Everyone’s Taxes Will Go Up—a Lot

Consider some of the options to pay for single payer CRFB examines, along with how they might affect average families.

A 32 percent payroll tax increase. No, that’s not a typo. Right now, employers and employees pay a combined 15.3 percent payroll tax to fund Social Security and Medicare. (While employers technically pay half of this 15.3 percent, most economists conclude the entire amount ultimately comes out of workers’ paychecks, in the form of lower wages.) This change would more than triple current payroll tax rates.

Real-Life Cost: An individual earning $50,000 in wages would pay $8,000 more per year ($50,000 times 16 percent), and so would that individual’s employer.

Real-Life Cost: An individual with $50,000 in income would pay $9,450 in higher taxes ($50,000 minus $12,200, times 25 percent).

A 42 percent Value Added Tax (VAT). This change would enact on the federal level the type of sales/consumption tax that many European countries use to support their social programs. Some proposals have called for rebates to some or all households, to reflect the fact that sales taxes raise the cost of living, particularly for poorer families. However, using some of the proceeds of the VAT to provide rebates would likely require an even higher tax rate than the 42 percent CRFB estimates in its report.

Real-Life Cost: According to CRFB, “the first-order effect of this VAT would be to increase the prices of most goods and services by 42 percent.”

Mandatory Public Premiums. This proposal would require all Americans to pay a tax in the form of a “premium” to finance single payer. As it stands now, Americans with employer-sponsored insurance pay an average of $6,015 in premiums for family coverage. (Employers pay an additional $14,561 in premium contributions; most economists argue these funds ultimately come from employees, in the form of lower wages—but workers do not explicitly pay these funds out-of-pocket.)

Real-Life Cost: According to CRFB, “premiums would need to average about $7,500 per capita or $20,000 per household” to fund single payer. Exempting individuals currently on federal health programs (e.g., Medicare and Medicaid) would prevent seniors and the poor from getting hit with these costs, but “would increase the premiums [for everyone else] by over 60 percent to more than $12,000 per individual.”

Reduce non-health federal spending by 80 percent. After re-purposing existing federal health spending (e.g., Medicare, Medicaid), paying for single payer would require reducing everything else from the federal budget—defense, transportation, education, and more—by 80 percent.

Real-Life Cost: “An 80 percent cut to Social Security would mean reducing the average new benefit from about $18,000 per year to $3,600 per year.”

The report includes other options, including an increase in federal debt to 205 percent of gross domestic product—nearly double its historic record—and a more-than-doubling of individual and corporate income tax rates. The impact of the last is obvious: Take what you paid to the IRS on April 15, or in your regular paycheck, and double it.

In theory, lawmakers could use a combination of these approaches to fund a single-payer health care system, which might blunt their impact somewhat. But the massive amounts of revenue needed gives one the sense that doing so would amount to little more than rearranging deck chairs on a sinking fiscal ship.

Taxing Only the Rich Won’t Pay for Single Payer

CRFB reinforced their prior work indicating that taxes on “the rich” could at best fund about one-third of the cost of single payer. Their proposals include $2 trillion in revenue from raising tax rates on the affluent, another $2 trillion from phasing out tax incentives for the wealthy, another $2 trillion from doubling corporate income taxes, $3 trillion from wealth taxes, and $1 trillion from taxes on financial transactions and institutions.

Several of the proposals CRFB analyzed would raise tax rates on the wealthiest households above 60 percent. At these rates, economists suggest that individuals would reduce their income and cut back on work, because they do not see the point in generating additional income if government will take 70 (or 80, or 90) cents on every additional dollar earned. While taxing “the rich” might sound publicly appealing, at a certain point it becomes a self-defeating proposition—and several proposals CRFB vetted would meet, or exceed, that point.

Socialized Medicine Will Permanently Shrink the Economy

The report notes that “most of the [funding] options we present would shrink the economy compared to the current system.” For instance, CRFB quantifies the impact of funding single payer via a payroll tax increase as “the equivalent of a $3,200 reduction in per-person income and would result in a 6.5 percent reduction in hours worked—a 9 million person reduction in full-time equivalent workers in 2030.”

By contrast, deficit financing a single-payer system would minimize its drag on jobs, but “be far more damaging to the economy.” The increase in federal debt “would shrink the size of the economy by roughly 5 percent in 2030—the equivalent of a $4,500 reduction in per person income—and far more in the following years.”

Moreover, these estimates assume a great amount of interest by foreign buyers in continuing to purchase American debt. If the U.S. Treasury cannot find buyers for its bonds, a potential debt crisis could cause the economic damage from single payer to skyrocket.

To say single payer would cause widespread economic disruption would put it mildly. Hopefully, the CRFB report, and others like it, will inspire the American people to reject the progressive left’s march towards socialism.

This post was originally published at The Federalist.

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.

New LSU “Jobs” Study Raises More Questions Than It Answers

The release by the Louisiana Department of Health late Friday afternoon of an updated study showing the jobs benefit of Medicaid expansion concedes an important point pointed out by the Pelican Institute over 16 months ago. This year’s study admits that the 2018 paper over-counted the federal dollars and jobs associated with Medicaid expansion, because it failed to subtract for the many people who forfeited federal subsidies when they transitioned from Exchange coverage to Medicaid after expansion.

However, the researchers have yet to offer an explanation—or a retraction—of their inflated claims in last year’s paper. Nor have the Department of Health and LSU begun to answer the many questions about the circumstances surrounding these flawed studies.

While correcting one error, this year’s study also contains other questionable claims and assumptions:

  • The 2019 study discusses substitution effects, whereby federal Medicaid dollars merely replace other forms of health care spending. However, unlike a Montana study in which the researchers cite in their work, the Louisiana paper apparently does not quantify instances where federal dollars substituted for dollars previously spent by individuals or employers—thereby inflating the supposed impact of Medicaid expansion. That apparent omission also means the researchers did not quantify the number of people who dropped private coverage to join Medicaid expansion—which internal Department of Health records suggest is larger than the Department has publicly admitted.
  • The 2019 study claims that the federal dollars attributable to Medicaid expansion declined by only 4.4% from Fiscal Year 2017 ($1.85 billion) to Fiscal Year 2018 ($1,768 billion). Yet, the number of jobs attributed to these federal dollars decreased by 25.5%, from 19,195 in 2017 to 14,263 in 2018. This drop in the jobs impact suggests significant changes to the economic modeling used in the 2018 study when compared to this year’s paper. Yet, the researchers provide no explanation for this decline, or any changes in their methodology.
  • While not explaining the decline in the jobs outcomes compared to last year’s paper, the 2019 study also does not explain many other figures cited in the paper. For instance, the paper discusses—but does not include a specific dollar figure for—the federal dollars forfeited by individuals who switched from Exchange coverage to Medicaid expansion. Particularly given the errors in last year’s paper, the researchers had an obligation to “show their work,” and provide clear and transparent calculations explaining their conclusions. They did not do so.

The researchers also fail to note that, their study’s claims to the contrary, Louisiana has barely created any jobs since Medicaid expansion took effect. According to the Bureau of Labor Statistics, in June 2016, the month before expansion took effect, Louisiana had 1,979,100 jobs. According to the most recent federal data, Louisiana’s non-farm payrolls now stand at 1,981,000 jobs—a meager gain of 1,900 jobs in over three years. With Louisiana having over 10,000 more jobs one year before expansion took effect than it does today, the real-life data show that greater dependence on the federal government has not provided the economic boom that the study’s authors claim.

Rather than relying on an expansion of the welfare state to generate jobs—an agenda that has not worked, as the past three years have demonstrated—Louisiana should instead reform its Medicaid program as part of a broader agenda to create jobs and opportunity for the state. The people of Louisiana deserve real change in their lives, not flawed, taxpayer-funded studies attempting to defend the failed status quo.

This post was originally published by the Pelican Institute.

LSU, Department of Health Inflate Claims in Medicaid Expansion Studies

In the coming days, the Louisiana Department of Health (LDH) will release a study conducted by LSU researchers claiming that Medicaid expansion created tens of thousands of jobs in Louisiana. The study’s underlying premise, that higher taxes and government spending will create economic growth, has rightfully raised questions among free market and conservative circles in the state. But before they release this year’s study, both the Department and LSU face an even more fundamental problem: Last year’s version of this report made inflated claims.

Last month, a similar study covering the potential impacts of Medicaid expansion in North Carolina highlighted the problems with the LSU report. In calculating the federal dollars attributable to Medicaid expansion, the North Carolina researchers “subtract[ed] the federal tax credits that otherwise would have been paid for individuals with incomes between 100% and 138% of poverty for” coverage on the health insurance Exchange.

After months of public records requests by the Pelican Institute, the LSU researchers acknowledged that—unlike their counterparts on the North Carolina study—they did not subtract these foregone Exchange subsidies when calculating the “net new federal dollars” attributable to Medicaid expansion. The university stated that while the researchers “indicated the desire to analyze other data” regarding Exchange subsidies, they ultimately “did not do so.”

Because the researchers did not subtract the federal Exchange subsidies forfeited by new Medicaid recipients, they inflated the “net new federal dollars” attributable to expansion. Additionally, the study inflated the jobs supposedly associated with Medicaid expansion by a sizable amount.

According to the federal Centers for Medicare and Medicaid Services (CMS), subsidized enrollment on Louisiana’s Exchange fell by nearly half, from 170,806 in March 2016 to 93,865 in March 2018. Fully, 96.5 percent of that decline came from the narrow sliver of the population that now qualifies for expansion, because these individuals moved from the Exchange to Medicaid. Multiplying these tens of thousands of individuals by the average Exchange subsidy provided to them means last year’s study overstated the “net new federal dollars” attributable to expansion by hundreds of millions of dollars, and thousands of jobs.

Taken at face value, LSU’s response means the researchers inflated the study’s claims—they intended to examine the CMS data but did not do so, ignoring a data source that would reduce their study’s results. Even a more benign interpretation, in which the researchers did not know about the CMS data when they originally drafted their report, does not explain the professors’ continued silence on this matter.

On three separate occasions, the Pelican Institute specifically asked the researchers to retract the flawed study. On each occasion, the researchers failed to acknowledge the request.

The Pelican Institute also pointed out the flaws in last year’s study to LDH. According to the public records requests, the lead LSU researcher sent Secretary Rebekah Gee and Medicaid Director Jen Steele a copy of the Pelican Institute’s rebuttal—which prominently noted its inaccuracy—on April 25, 2018.

As individuals responsible for a $12 billion Medicaid program, both Secretary Gee and Ms. Steele undoubtedly know that federal law made individuals who qualified for Medicaid expansion ineligible for Exchange subsidies once expansion took effect. Therefore, they should also know that, by failing to subtract the foregone Exchange subsidies in its calculations, the study inflated the impact of Medicaid expansion. Despite these facts, LDH is spending even more taxpayer dollars to produce a predictably flawed follow-up report.

With so much conflicting information circulating around Medicaid expansion, the people of Louisiana deserve the truth, not more inflated claims from flawed studies. Coming on the heels of stories about Medicaid recipients with six-figure incomes and tens of thousands of individuals dropping private insurance to enroll in expansion, this study is the latest instance of LDH failing to disclose important facts to the public. Lawmakers should increase their oversight of the Medicaid program, and taking a close look at this study is a good place to start.

This post was originally published at Houma Today.

Three Reasons You Won’t Keep Your Doctor Under Single Payer

Over Fourth of July week, liberal activists took solace in the results of a poll that they said demonstrates the popularity of a single-payer health system. The survey showed diminished support for a “‘Medicare for All’ [system] if it diminished the role of private insurers.” However, support rose by nearly ten points if pollsters described single payer as a system that “diminished the role of private insurers but allowed you to keep your preferred doctor and hospital.”

Staff for Sen. Bernie Sanders (I-VT) claimed the survey showed single payer “is wildly popular when you tell people what it would actually do.” That claim misses the mark on several levels. First, most individuals wouldn’t consider a 55 percent approval rating—the level of support for a single-payer plan that allows patients to keep their doctors—as evidence of a “wildly popular,” as opposed to mildly popular, policy.

More fundamentally, though, single payer has precious little to do with keeping one’s doctor. For at least three reasons, many patients will lose access to their preferred physicians and hospitals under a single-payer system.

‘Free Care’ Means People Will Demand More

Second, the Sanders legislation would virtually eliminate medical cost-sharing—deductibles, co-payments, and the like. As a result, individuals who currently have health insurance would use more care once it becomes “free.”

In their analysis of single-payer legislation, both the Rand Corporation and the liberal Urban Institute have estimated that induced demand would result in capacity constraints for health care supply. In other words, so many more people would clamor for “free” care that the system would not have enough doctors or facilities to treat them.

More Work, Less Pay

As I noted last year, single-payer supporters operate under the fanciful premise that doctors and hospitals will perform more procedures for less money. Nearly three-quarters of hospitals already lose money on their Medicare patients—and single payer would extend those Medicare reimbursement rates to all patients nationwide. A study earlier this year in the Journal of the American Medical Association (JAMA) concluded that a single-payer system linked to Medicare payment levels would reduce hospitals’ revenue by $151 billion annually.

More Soul-Crushing Regulations

The federal government has already caused physicians countless hours of paperwork and grief. Thanks to requirements regarding electronic health records introduced in President Obama’s “stimulus,” an emergency room physician makes an average of 4,000 clicks in one shift. Rather than practicing their craft and healing patients, physicians have become button-clicking automatons, forced to respond to Washington’s every whim and demand.

The combination of more work, less pay, and added government intrusion under single payer could cause many physicians to leave the profession. For instance, the electronic records requirements caused my mother’s longtime physician to retire—he didn’t want to spend all his time staring at a computer screen (and who can blame him).

Some physicians could instead eschew the single-payer route, offering their services on a cash basis to wealthy patients who can afford to opt-out of the government system (provided the government will permit them to do so). Still other individuals may make alternative career plans, abandoning medicine even before they begin their formal training.

Here’s hoping that the American people never get an opportunity to discover the fanciful nature of Sanders’s promise that you can keep your doctor and hospital under single payer.

This post was originally published at The Federalist.

Democrats Debate How Many Americans to Take Coverage Away From

The first segment of Wednesday evening’s Democratic presidential debate featured the ten candidates largely competing amongst themselves to see who could offer the most far-reaching proposals. In response to a question from the moderators, the candidates debated whether to allow individuals to keep the private insurance plans that most Americans have (and like) currently.

Of the candidates on stage, only New York Mayor Bill de Blasio and Massachusetts Sen. Elizabeth Warren said they wanted to do away with private insurance entirely. But as I explained on Wednesday, the other candidates’ plans for a so-called “public option” could result in two-thirds of those with employer-sponsored coverage losing their insurance. In reality, then, the debate centered not around whether to take away Americans’ current health coverage, but how many would lose their insurance—and how honest Democrats would be with the American people in doing so.

For better or for worse, by saying “I’m with [Sen.] Bernie [Sanders]” on eliminating private coverage, Warren admitted that she’s “got a plan” for taking away Americans’ current insurance. Having seen her fellow senator and presidential candidate Kamala Harris flip-flop on her earlier comments about banning private coverage, Warren went all-in on embracing single-payer insurance, perhaps to siphon away Sanders’ socialist base.

Warren used flimsy reasoning to justify her support for single payer, talking repeatedly about insurers’ profits. As she noted, those profits totaled just over $20 billion last year. But during the last fiscal year, Medicare and Medicaid incurred a combined $84.7 billion in improper payments—payments made in the wrong amount, or outright fraud. With improper payments in government programs totaling nearly four times the amount of insurers’ earnings, a move to single payer would likely end up substituting private-sector profits for increased waste, fraud, and abuse in the government plan.

In rebuttal, Maryland Rep. John Delaney pointed out that Sanders’ bill would pay doctors and hospitals at Medicare reimbursement rates. Because government programs pay medical providers less than the cost of care in many cases—72 percent of hospitals lost money on their Medicare patients in 2017—Delaney persuasively argued that extending those payment rates to all patients could cause many hospitals to close.

Indeed, a study in the Journal of the American Medical Association earlier this year concluded that single payer would reduce hospital payments by more than $150 billion annually. To cope with losses that massive, hospitals could lay off up to 1.5 million workers alone. If extended to doctors’ offices and other medical providers, single payer could put millions of Americans out of work—job losses that would obviously affect access to care.

Ironically, the health care debate soon pivoted to talk about “reproductive health.” Commentators noted that the candidates seemed much more eager to talk about abortion issues—on which they almost all agree—than on single payer. But of course, the two remain linked, as Democrats not only want to have taxpayers fund abortions, but to force doctors and hospitals to perform them.

It says something about the current state of the Democratic Party that forcing doctors to perform abortions, and taking away the coverage of “only” 100 million or so Americans, now represent moderate positions within the party. If Democrats want to win over persuadable swing voters next November, they sure have a funny way of showing it.

This post was originally published at The Federalist.

California Is What’s Wrong with Obamacare

In recent days, California lawmakers have finalized their budget. The legislation includes several choices regarding health care and Obamacare, most of them incorrect ones. Doling out more government largesse won’t solve rising health costs, and it will cause more unintended consequences in the process.

Health Coverage for Individuals Unlawfully Present

This move has drawn the most attention, as the budget bill expands Medicaid coverage to illegally present adults aged 19-26. California will pay the full share of this Medicaid spending, as the federal government will not subsidize health coverage for foreign citizens illegally present in the United States.

As to those who disagree with this move, one can study the words of none other than Hillary Clinton. In 1993, she testified before Congress in opposition to giving illegal residents full health benefits, because “illegal aliens” were coming to the United States for health care even then:

We do not think the comprehensive health care benefits should be extended to those who are undocumented workers and illegal aliens. We do not want to do anything to encourage more illegal immigration into this country. We know now that too many people come in for medical care, as it is. We certainly don’t want them having the same benefits that American citizens are entitled to have.

If Clinton’s words don’t sound compelling enough, consider one way that California may finance these new benefits: By reinstating Obamacare’s individual mandate. To put it another way, people who obey the law (i.e., the mandate) will fund free health coverage for people who by definition have broken the law by coming to, or remaining in, the United States unlawfully.

A Questionable Individual Mandate

This issue faces multiple questions on both process and substance. First, the budget bill includes about $8 million for the state’s Franchise Tax Board to implement an individual mandate, but doesn’t actually contain language imposing the mandate. The bill that would reimpose the mandate, using definitions originally included in the federal law, passed the Assembly late last month, but faces opposition in the Senate.

Third, implementing the mandate imposes legal and logistical challenges. I argued in the Wall Street Journal last fall that states cannot require employers who self-fund health coverage to report their employees’ insurance coverage to state authorities. The mandate bill the Assembly passed does not include such a requirement.

Without a reporting requirement on employers, a mandate could become toothless, because the state would have difficulty verifying coverage to ensure compliance—people could lie on their tax forms and likely would not get caught. However, imposing a reporting regime, either through the mandate bill or regulations, would invite an employer to claim that federal labor law (namely, the Employee Retirement Income Security Act) prohibits such a state-based requirement.

More Spending on Subsidies

While the budget bill does not include an explicit insurance mandate, it does include more than $295 million to “provide advanceable premium assistance subsidies during the 2020 coverage year to individuals with projected and actual household incomes at or below 600 percent of the federal poverty level.”

Obamacare epitomized the problems that policy-makers face in subsidizing health insurance. The federal law includes a subsidy “cliff” at 400 percent of the poverty level. Households making just under that threshold can receive federal subsidies that could total as much as $5,000-$10,000 for a family, but if their income rises even one dollar above that “cliff,” they lose all eligibility for those subsidies.

By penalizing individuals whose incomes rise even marginally, the subsidy “cliff” discourages work. That’s one of the main reasons the Congressional Budget Office said Obamacare would reduce the labor supply by the equivalent of 2.5 million full-time jobs.

California decided to replace these work disincentives with yet more spending on subsidies. This year, the federal poverty level stands at $25,750 for a family of four—which makes 600 percent of poverty equal to $154,500. In other words, a family making more than $150,000 will now classify as “low-income” for purposes of the new subsidy regime.

Hypocrisy by Officials

The individual mandate bill gives a significant amount of authority for its implementation to Covered California, the state’s insurance exchange. The bill says the exchange will determine the amount of the mandate penalty, and determine who receives exemptions from the mandate.

Who runs California’s exchange? None other than Peter Lee, the man I previously profiled as someone who earns $436,800 per year, yet refuses to buy the exchange coverage he sells. Or, to put it another way, if the mandate passes, Lee will be standing in judgment of individuals who refuse to do what he will not—buy an Obamacare plan.

If you think that seems a bit rich, you would be correct. But it epitomizes the poor policy choices and hypocritical actions taken by officials to prop up Obamacare in California.

This post was originally published at The Federalist.

Reforming Medicaid in Louisiana

A PDF of this document is available at the Pelican Institute website.

Two years ago, the incoming administration of Gov. John Bel Edwards (D-LA) pledged that expanding Medicaid to able-bodied adults, as permitted under Obamacare, would help solve Louisiana’s ongoing structural budget shortfalls. Unfortunately, the Governor’s promises have not come to fruition. Enrollment in the Medicaid expansion has exceeded projections—as have the costs associated with that expansion. As a result, Louisiana faces a scenario plaguing many states that expanded Medicaid: Rising spending on expansion crowding out other important budgetary priorities like education, transportation, and law enforcement.

Democrats have already proposed a series of tax increases to “solve” the state’s fiscal crisis.[1] But that “solution” misses the point—and won’t actually solve the problem. Rather than raising taxes yet again, to pay for more unaffordable health care spending, Louisiana should both right-size and reform its Medicaid program. Right-sizing the program would involve unwinding the massive expansion to the able-bodied—working-age adults without dependent children—to return Medicaid to serving the populations for which it was originally designed—pregnant women, children, senior citizens, and individuals with disabilities.

After right-sizing the Medicaid program, state leaders should then work to reform and modernize Medicaid for the 21st century. Specifically, Louisiana should work with the Trump Administration to enact a comprehensive Medicaid reform waiver. This waiver could include components to improve coordination of beneficiary care, introduce consumer choice elements into Medicaid, provide a smoother transition to work and employer-based coverage for those who are able to work, and improve program integrity to use scarce taxpayer dollars most effectively.

Individually and collectively, the policy solutions outlined in this paper—unwinding Medicaid expansion and embracing a comprehensive waiver to enact additional reforms—would help put Louisiana on a more sustainable fiscal trajectory, eliminating the need for the tax-and-spend battles of the past several years. By so doing, the state could focus more on enacting reforms necessary for the economy to thrive, bringing jobs back to Louisiana.

 

Massive Expansion

Fewer than two years since Louisiana first expanded Medicaid under Obamacare to able-bodied adults, enrollment in the expansion has already shattered expectations. While officials first projected about 306,000 previously uninsured individuals would gain coverage through expansion, within days of Gov. Edwards signing the executive order authorizing Medicaid expansion, state officials revised their estimates dramatically upward. At that time, officials claimed that as many as 450,000 Louisianans could be added to the Medicaid rolls by expansion.[2] However, even this projection turned out to be an under-estimate, as by December 2017 enrollment reached 456,004, exceeding the higher projection.[3] Louisiana officials admit that, as enrollment exceeds the original 306,000 projection, costs to the state will increase, reducing the state’s supposed fiscal savings.[4]

The fact that Louisiana’s Medicaid expansion has exceeded enrollment projections should come as no surprise. In fact, virtually every state that expanded Medicaid to the able-bodied under Obamacare has seen vastly more enrollees than they had originally planned for. A November 2016 study by the Foundation for Government Accountability (FGA) showed that 24 states’ Medicaid expansion had within two years exceeded projections for the maximum number of individuals that would ever enroll in the Obamacare expansion by an average of 110%.[5]

An earlier report by FGA, issued in April 2015, found that enrollment had exceeded estimates in 17 states. Collectively, those 17 states exceeded their maximum enrollment projections by an average of “only” 61%.[6] By comparison, just eighteen months later, a total of 24 states had exceeded their maximum enrollment projections by more than 110%—amounting to over 6 million enrollees more than projected.[7] More states continue to enroll many more individuals than projected in Medicaid expansion, even after many states already exceeded projections in the expansion’s first year.

The enrollment explosion in “free” Medicaid contrasts with more limited enrollment in Obamacare’s other venue for coverage expansion—health insurance Exchanges. While Medicaid enrollment vastly exceeded projections, as of the 2017 open enrollment period, effectuated Exchange enrollment stood at only 10.3 million individuals.[8] This enrollment figure represents less than half the 23 million individuals the Congressional Budget Office estimated at the time of Obamacare’s enactment would sign up for Exchange coverage in 2017.[9]

Moreover, studies suggest that only individuals who qualify for the most generous subsidies have joined insurance Exchanges in significant numbers. The consulting firm Avalere Health concluded that more than four in five (81%) eligible individuals with incomes of under 150% of the federal poverty level—who qualify for both the richest premiums subsidies and reduced deductibles and co-payments—have signed up for Exchange coverage.[10] By comparison, only about one-sixth (16%) of those with incomes between three and four times the poverty level—who qualify for much smaller premium subsidies, and receive no help with cost-sharing—purchased Exchange coverage.[11] Put simply, while individuals quickly sign up for “free,” or nearly free, health insurance coverage, including through Medicaid, they have signed up much more slowly for health plans for which they must make a financial contribution.

 

Massive—and Rising—Costs

Even prior to Obamacare, Medicaid had grown exponentially over the past several decades to become a larger and larger share of Louisiana’s state budget. In fiscal year 1985, Medicaid represented 8.9% of Louisiana’s total budgetary expenditures.[12] Thirty years later, in fiscal year 2015, Medicaid had more than tripled as a share of the state budget, rising to 27.6% of total expenditures.[13]

The rising tide of Medicaid spending in Louisiana echoes national trends. In fiscal year 1985, Medicaid consumed an average of 9.7% of total state expenditures across all 50 states.[14] By comparison, in fiscal year 2013, the last year before Obamacare’s expansion took effect, Medicaid represented an average of 24.4% of state spending.[15] Over a quarter-century, then, Medicaid spending more than doubled as a share of state spending—before most of Obamacare’s effects kicked in.

However, even when compared to other states, Louisiana suffered from skyrocketing Medicaid spending prior to Obamacare expansion taking effect. The Pew Charitable Trusts noted that, during the years 2000-2015, Medicaid grew the fastest in Louisiana when measured as a share of the state’s own spending. During that time, Medicaid grew by 12.8 percentage points—from 10.5% of the state’s spending to 23.3% of state dollars.[16] As a result of that growth in Medicaid spending, Louisiana was the state most dependent on federal funds in fiscal year 2015, using money from Washington to comprise 42.2% of its budget—again, before Obamacare’s Medicaid expansion ever took effect in Louisiana.[17]

States like Louisiana that chose to expand Medicaid to the able-bodied face additional rising costs, due to both higher than expected enrollment in Medicaid expansion and higher than expected per-beneficiary spending for those expansion enrollees. In late 2016, the Centers for Medicare and Medicaid Services’ (CMS) Office of the Actuary released its annual report on the state of the Medicaid program. The report found that, contrary to projections that expansion enrollees would have per-beneficiary costs lower than previously eligible Medicaid beneficiaries, states actually faced higher per-beneficiary costs for the expansion population than their prior enrollees.[18] In 2016, expansion enrollees cost the Medicaid program an average of $5,926, compared to average spending of $5,215 for non-expansion adults.[19]

The higher spending on Medicaid expansion enrollees has now persisted for several years, contrary to predictions before the coverage expansion took effect. At first, the CMS actuary thought that the higher spending came from pent-up demand for health care—previously uninsured enrollees using their newfound Medicaid coverage to cover heretofore-neglected health conditions.[20] However, the 2014, 2015, and 2016 annual reports on Medicaid all demonstrated higher per-beneficiary spending for expansion populations than those eligible prior to Obamacare.[21]

Echoing the national trends, Medicaid per-beneficiary spending in Louisiana remains higher for expansion enrollees than previously eligible beneficiaries. State officials admit that in fiscal year 2017, spending for expansion enrollees totaled $6,712 per adult—more than 20% higher than the $5,575 spent on non-expansion enrollees.[22] Liberal supporters of the expansion claim that the disparity arises from pent-up demand by new enrollees—the same assumption federal actuaries made.[23] However, the higher spending by expansion enrollees over several years at the federal level suggests that higher spending by expansion enrollees may persist in Louisiana as well.

With enrollment higher than initial projections, and spending on those new enrollees averaging more than anticipated, many states now face fiscal crises brought on by their Medicaid expansions. Under the Obamacare statute, states began to pay a share of the costs for the Medicaid expansion in calendar year 2017. Moreover, states’ 5% share of expansion enrollees’ health costs in 2017 will double over the next few years, rising to 6% in calendar year 2018, 7% in calendar year 2019, and 10% in calendar year 2020.[24] Given the vast sums that states already devote to their Medicaid programs, paying five percent—let alone ten percent—of expansion costs will add significant new stresses to state budgets.

Even as Louisiana expanded Medicaid to the able-bodied, other states began facing expansion’s negative effects, with budget shortfalls looming because the expansion exceeded projected costs. Kentucky’s estimated costs of expansion in fiscal years 2017 and 2018 rose from $107 million to $257 million—a more than doubling of costs that will take money away from other state priorities like education, transportation, or law enforcement.[25] Likewise, Ohio’s budget for Medicaid expansion more than doubled compared to the state’s prior projections, leaving legislators scrambling to cut money from other programs to stem the shortfall.[26]

With Medicaid expansion squeezing state budgets, even Democratic state legislators across the country have contemplated what some liberals might consider apostasy—scaling back and right-sizing the Medicaid program to reflect competing fiscal priorities. Consider comments from New Mexico state senator Howie Morales, a Democrat:

When you’re looking at a state budget and there are only so many dollars to go around, obviously it’s a concern. The most vulnerable of our citizens—the children, our senior citizens, our veterans, individuals with disabilities—I get concerned that those could be areas that get hit.[27]

Other legislators agree, with an Oregon Democratic State Senator reflecting on his state’s $500 million budget shortfall by stating that “the only way to keep this [budget situation] manageable is to keep those costs under control, get people off Medicaid.”[28]

The growth in Medicaid spending has resulted in cascading effects across states—including in Louisiana. As the state’s budget history demonstrates, a dollar of spending on Medicaid results in fewer dollars for other programs. For instance, as the share of Louisiana’s budget devoted to Medicaid more than tripled from 1985 through 2015, the share of the budget dedicated to primary and secondary education fell from 23.5% to 18.8%, the share dedicated to higher education fell from 10.9% to 9.9%, and the share dedicated to transportation fell by half, from 11.2% to 5.6%.[29] If Louisiana continues down its current path, schools, universities, and roads will face a continued squeeze as Medicaid consumes more and more state resources.

Moreover, the current Medicaid-imposed woes that states face assume that the enhanced federal match remains static—a far from safe assumption. With the federal debt recently topping $20 trillion, the belief that Washington will continue to pay 90 percent of states’ expansion costs in 2020 and every year thereafter may strike some as an overly rosy scenario.[30] Indeed, President Obama himself once proposed reducing the federal Medicaid match by $100 billion over ten years through a so-called “blended rate” policy.[31] Only an outcry from liberals, combined with the 2012 Supreme Court ruling that made Medicaid expansion optional for states, eventually persuaded President Obama to abandon the proposal.[32] However,  given Washington’s own dire fiscal situation, the concept could well return in future years.

More recently, Congress has begun taking action to rein in another enhanced match provided to states as part of Obamacare. Specifically, Section 2101 of the law provided a 23 percent increase in the federal match to State Children’s Health Insurance Programs (SCHIP) across the country.[33] As a result of the increase, Louisiana’s SCHIP match rate in the current fiscal year ending September 30 stands at 97.58%, instead of the usual 74.58%.[34] A total of 12 states, plus the District of Columbia, currently receive a 100% match for their SCHIP programs, meaning the federal government effectively funds all of the health costs of these states’ SCHIP enrollees.[35]

However, the costs of the enhanced federal SCHIP match on Washington’s budget have led Congress to eliminate that enhanced match within the next few years.  SCHIP legislation signed into law earlier this month will phase out the enhanced match—lowering the 23 percent match to 11.5 percent in fiscal year 2020, while eliminating it altogether in fiscal 2021.[36] With bipartisan agreement within Congress on eliminating Obamacare’s enhanced SCHIP match rate, state lawmakers would do well to consider whether and when Congress will likewise eliminate the enhanced match for Obamacare’s Medicaid expansion to the able-bodied.

 

Difficulties for the Most Vulnerable

In addition to skyrocketing enrollment and costs, the Medicaid expansion has hurt some of the most vulnerable Americans in society, because Obamacare effectively gives state programs financial incentives to discriminate against individuals with disabilities.[37] Traditionally, the federal government provides states with a Medicaid match through a statutory formula comparing a state’s average income to the national average. For their traditional beneficiaries—that is, pregnant women, children, the aged, medically frail, and individuals with disabilities—states receive a federal Medicaid match ranging from 50% to 83%. For the current fiscal year, Louisiana will receive a 63.69% match rate for these populations.[38]

However, as noted above, Obamacare gives states a much greater federal match to cover its expansion population—individuals with incomes of under 138 percent of the poverty level ($34,638 for a family of four in 2017). For calendar year 2017, states received a 95% federal match, which will fall slightly to 94% in 2018, 93% in 2019, and 90% in 2020.[39] Put another way, Louisiana will receive over 30 cents more on the dollar from the federal government to cover the expansion population this year than it will to cover traditional beneficiaries eligible for Medicaid prior to Obamacare.

This yawning disparity in the federal match favoring expansion enrollees over traditional beneficiaries comes despite noteworthy characteristics of the individuals who qualify for Obamacare’s Medicaid expansion. Specifically, the liberal Urban Institute found that nationwide, 82.4% of the expansion population consisted of able-bodied adults of working age.[40] In Louisiana, nearly three-quarters (74.9%) of projected expansion enrollees represented adults without dependent children.[41]

In other words, the federal government offers—and under the current governor, Louisiana accepted—an arrangement whereby states receive a significantly greater federal match to provide services to able-bodied adults of working age than to provide services to the individuals for whom Medicaid was traditionally designed: The medically frail, aged, and individuals with disabilities. Moreover, this disparity comes as many of the latter need critically important services, which they cannot currently obtain from Louisiana’s Medicaid program.

While the federal Medicaid statute requires state programs to provide medical coverage to individuals with disabilities, it does not require them to provide personal care services outside a nursing home setting. Because the law makes such home and community-based services (HCBS) optional, states can utilize waiting lists to control access to such services—and many, including Louisiana, do just that. Overall, more than 640,000 individuals with disabilities remain on lists waiting to access HCBS nationwide—including 62,828 in Louisiana.[42]

Prior to Louisiana accepting Obamacare’s Medicaid expansion to the able-bodied, the state prioritized coverage for individuals with disabilities. Instead of pushing to expand Medicaid under Obamacare, efforts instead focused on providing funds necessary to reduce the state’s HCBS waiting list for individuals with disabilities.[43] However, the current administration has taken the exact opposite tack—prioritizing an expansion of coverage for the able-bodied over the personal care needs of the most vulnerable Louisianans. As a result, able-bodied adults with low incomes can qualify for Medicaid immediately, while individuals with developmental disabilities must wait an average of seven years just to be evaluated for home-based care for their personal needs.[44]

Several states that expanded Medicaid under Obamacare before Louisiana provide evidence of the damage that expansion has caused for society’s most vulnerable. In Arkansas, while Gov. Asa Hutchinson pledged to reduce his state’s HCBS waiting lists in half under his administration, the rolls have risen 25 percent—even as the state continues its Medicaid expansion to the able-bodied.[45] Since the state expanded Medicaid to the able-bodied, at least 79 individuals with disabilities have died while on waiting lists seeking access to home-based care.[46]

Vulnerable residents in other states have likewise suffered as a result of Obamacare’s Medicaid expansion. In Ohio, the administration of Gov. John Kasich reduced eligibility for 34,000 individuals with disabilities, even while expanding Medicaid to the able-bodied.[47] In Illinois, lawmakers voted to allow Cook County to expand Medicaid early on the same day in which they also voted to reduce medication access for individuals with disabilities.[48] In that state, at least 752 residents with disabilities have died awaiting access to home-based care since the state embraced Obamacare’s Medicaid expansion.[49]

The claims of its proponents to the contrary, any policy that prioritizes able-bodied adults over the most vulnerable in society represents the antithesis of compassion. As more and more individuals crowd on to the Medicaid rolls, literally hundreds of thousands of individuals with disabilities wait for access to care—and in some cases, die well before they receive it. Any compassionate society should focus its greatest efforts on protecting the most vulnerable, meaning no state should expand Medicaid to the able-bodied without first having eliminated entirely its waiting list of individuals with disabilities seeking home-based care.

While disadvantaging the most vulnerable in society, who literally wait for years for access to personal care paid for by Medicaid, expansion of the Medicaid entitlement also disadvantages the expansion’s purported beneficiaries—able-bodied adults within working age—in several respects. Medicaid generally provides poorer health outcomes than most other forms of coverage, such that some analysts have questioned whether its patients fare worse than the uninsured.[50]

In general, states provide low reimbursement levels to doctors and hospitals treating Medicaid patients, in large part due to the fiscal pressures discussed above. However, these low reimbursement rates mean many medical providers do not accept Medicaid patients. One study found that specialty physicians denied appointments for two-thirds of Medicaid patients, compared to only an 11% denial rate for patients with private insurance. Moreover, “the average wait time for Medicaid” enrollees who did obtain an appointment “was 22 days longer than that for privately insured children.”[51] Through their “secret shopper” survey, the authors “found a disparity in access to outpatient specialty care between children with public insurance and those with private insurance.”

Louisiana does not deviate from the general pattern of state Medicaid programs providing poor reimbursements to physicians, as the state’s reimbursement levels stand slightly below the already low national average. Overall, the state pays physicians 70% of Medicare reimbursement levels, below the national Medicaid average of 72% of Medicare levels.[52] In primary care, Louisiana reimburses doctors at 67% of Medicare rates, one percentage point above the national average of 66%.[53] And in obstetrics, Louisiana reimburses doctors 70% of Medicare rates, eleven points below the national Medicaid average of 81%.[54] The comparatively paltry rates that Louisiana pays obstetricians come despite the fact that nearly two-thirds (65%) of babies born in the state in 2015 (i.e., before Medicaid expansion took effect) were paid for by Medicaid—the third highest rate of births paid for by Medicaid nationwide.[55]

The lack of access to physician care helps explain Medicaid’s middling performance in improving health outcomes. Most notably, the Oregon Health Insurance Experiment—which compared the health of individuals randomly selected to enroll in Medicaid with those who remained uninsured—found no measurable improvement in physical outcomes for the former group when compared to the latter.[56] The Oregon study also found that Medicaid beneficiaries utilized the emergency room 40 percent more than uninsured patients, a difference which persisted over time. These data suggest that patients lack a usual access to primary care that could alleviate medical conditions before necessitating emergency treatment—a further indication that Medicaid leaves much to be desired as a form of health coverage.[57]

Both Medicaid administrators and beneficiaries acknowledge the program’s shortcomings in providing access to care. One former program head called a Medicaid card a “hunting license”—a government-granted permission slip allowing beneficiaries to try to find a physician who will treat them.[58] With beneficiaries not even considering Medicaid “real insurance,” some would question the wisdom of consigning such a large—and growing—number of individuals to a program that provides such an uneven quality of care.[59]

 

Discouraging Work

In addition to providing beneficiaries with poor quality care, Medicaid expansion includes an in-built “poverty trap” that discourages entrepreneurship and social advancement. Specifically, the law includes numerous effects that will discourage work, and ultimately keep low-income individuals trapped in poverty for longer periods, while also stunting economic growth. According to the Congressional Budget Office (CBO), the Medicaid expansion represents one part of a larger Obamacare scheme that will reduce the labor supply nationally by the equivalent of 2.5 million full-time jobs by 2024.[60]

CBO believes that Medicaid expansion will reduce overall incentives to work. Most notably, Medicaid expansion creates an “income cliff,” whereby one additional dollar of income will cause a family to lose Medicaid eligibility entirely—subjecting them to hundreds, if not thousands, of dollars in health insurance premiums, deductibles, and co-payments as a result. As a result, CBO believes that the expansion will reduce beneficiaries’ labor force participation by about 4 percent by “creat[ing] a tax on additional earnings for those considering job changes.”[61] In other words, individuals will specifically avoid seeking a promotion, additional hours, or a bonus, because it will cause them to lose eligibility for Medicaid—the definition of a “poverty trap” that discourages low-income individuals from advancing their social strata.

Data from the liberal Urban Institute released prior to Obamacare taking effect suggest that most beneficiaries who qualify for Medicaid expansion represent individuals who could be in work, or preparing for work. In Louisiana, more than seven in eight adults who qualify for the expansion are of prime working age—either ages 19-24 (24.5%), 25-34 (25.7%), or 35-54 (37.4%).[62] With nearly three-quarters of Louisianans who qualify for expansion adults without dependent children, as noted above, many of these individuals should be able to work, or prepare for work.

Unfortunately, national data suggest that most beneficiaries enrolled in Medicaid are not working. Specifically, 2015 Census Bureau data indicate that more than half (52%) of non-disabled, working-age Medicaid beneficiaries are not working.[63] Only about one in six (16%) non-disabled Medicaid beneficiaries work full-time year-round, while about one in three (32%) work part-time, or for part of the year.[64]

If able-bodied individuals who currently qualify for Obamacare’s Medicaid expansion pursued full-time employment, many of them would no longer qualify for the expansion. The expansion applies to individuals with household income below 138 percent of the federal poverty level—which in 2018 equals $16,753 for a single individual, $22,715 for a couple, and $34,638 for a family of four.[65] At these levels, a couple each working 35 hours per week, 50 weeks per year, making the federal minimum wage of $7.25 per hour, or an individual working 40 hours per week, 50 weeks per year, making $8.50 per hour, would earn enough income to exceed the Medicaid eligibility thresholds.

While CBO believes Medicaid expansion will discourage work, evidence suggests that unwinding the expansion would increase employment, and employment-related search activity. A study of the Medicaid program in Tennessee, where the state scaled back the program in 2005 due to significant cost overruns, found that the reduction in Medicaid eligibility encouraged beneficiaries to look for work, and ultimately increased employment, as individuals looked for employment-based coverage.[66] Whereas Obamacare’s skewed incentives discourage work, scaling back Medicaid expansion could have salutary economic effects, by expanding the labor force in ways that could grow the economy.

 

What Lawmakers Should Do

The evidence shows the damage caused by Medicaid expansion, both in Louisiana and across the country. Soaring enrollment and higher-than-expected costs have led to fiscal crises in many states—crises that will only grow as states’ share of expansion costs increase in the coming years. Meanwhile, the urgent needs of many vulnerable citizens have taken a back seat, as Obamacare gives states more incentives to cover able-bodied adults than individuals with disabilities.

As the legislature considers its policy options, it should focus on both short-term and long-term solutions. In the short term, Louisiana should begin the process of winding down the Medicaid expansion to able-bodied adults, as one way of alleviating immediate budgetary pressures. In the longer term, the state should take advantage of the flexibility promised by the Trump Administration to consider more innovative reforms to the Medicaid program.

Enrollment Freeze:              The best way to end the high costs associated with the Medicaid expansion would involve freezing enrollment to new entrants.[67] Such a policy would allow individuals who already qualified for the expansion to remain as long as they maintain eligibility for the program. This proposal, passed by legislators in places like Ohio and Arkansas, would provide an orderly wind-down of the expansion, reducing costs to the state over time, while allowing people to transition into employer-sponsored insurance or other coverage as they lose Medicaid eligibility. [68]

One study released in early 2017 calculated the savings from a nationwide Medicaid freeze beginning in fiscal year 2018. Over a decade, this Medicaid freeze would generate approximately $56-64 billion in savings to state Medicaid programs, along with more than half a trillion dollars in savings to the federal government.[69] These savings would come without terminating Medicaid participation for a single beneficiary currently eligible for the program. The sizable savings provided to both the states and the federal government under a potential Medicaid freeze illustrates the need to wind down Medicaid’s expansion to the able-bodied in an orderly way, to restore the program’s focus to the populations for which it was originally intended.

Comprehensive Waiver:     Last March, then-Health and Human Services Secretary Tom Price and CMS Administrator Seema Verma sent a letter to the nation’s governors indicating their desire to expand state flexibility within the Medicaid program.[70] Since then, several organizations have published reports highlighting elements and policies that states could use to reform their Medicaid programs.[71] A bold waiver incorporating many of these policies could transform Medicaid programs across the country.

Louisiana should consider submitting a comprehensive waiver request to CMS. Such a waiver could include:

Consumer-Oriented Options:              Using Health Savings Account-like mechanisms would encourage beneficiaries to serve as smart shoppers of health care—generating savings that they could use once they leave the Medicaid program. Whether through Health Opportunity Accounts—an innovation passed by Congress in 2005, but effectively repealed under the Obama Administration—“right-to-shop” programs that give beneficiaries a chance to share in the savings from obtaining lower costs for non-emergency medical procedures, or other programs, giving beneficiaries financial incentives to act as smart health care consumers could benefit them as well as the Medicaid program.[72]

Wellness Incentives:                As with the consumer options above, providing incentives for healthy behaviors would encourage beneficiaries to improve their health, while giving them a potential source of financial savings. During the debate on Obamacare in 2009-10, wellness incentives proved one of the few sources of bipartisan agreement, thanks to the way in which Safeway and other firms reduced health costs through such reforms.[73] Particularly given the state’s high rates of obesity, Louisiana should consider bringing the “Safeway model” to the state’s Medicaid program.[74]

Premium Assistance:               Providing more flexible benefits to individuals with an offer of employer-sponsored coverage would allow Medicaid to supplement that coverage, thereby reducing costs and giving individuals access to higher-quality private insurance. Other policies in this vein might include a beneficiary waiting period designed to prevent “crowd-out”—individuals dropping private coverage to enroll in government programs—and Health Savings Account coverage, currently prohibited under two separate premium assistance programs.[75] These changes would help beneficiaries make a smoother transition off of the Medicaid rolls and into a life of work.

Home and Community-Based Services:             Focusing on ways to deliver care to beneficiaries outside of nursing homes could reduce costly Medicaid spending in institutional settings. Most importantly, it would enable patients to stay in their homes—most beneficiaries’ desired outcome. For instance, a state waiver could cap the number of nursing home slots available, or require beneficiaries to try receiving care at home prior to entering a nursing facility.[76] Collectively, these policies should create an affirmative bias in favor of care at home, rather than care at a nursing institution.

Work Requirements:               Unlike the Obama Administration, the Trump Administration has indicated a willingness to accept work requirements as part of a Medicaid waiver request.[77] Earlier this month, CMS issued a letter to state Medicaid directors indicating parameters to guide states as they prepare community engagement requirements—a document that reiterated the positive effects that work can have on beneficiaries’ economic success, self-sufficiency, and overall health.[78] Requiring that appropriate adult populations either work, look for work, or prepare for work, while exempting individuals with disabilities and other medically frail individuals, would further promote a transition from welfare into work.

Program Integrity:     Verifying eligibility on a regular basis would ensure that state and federal resources remain targeted to those most in need—an important priority given the way in which scam artists in Louisiana have sought to abuse the Medicaid program.[79] Increasing penalties for fraud would halt scam artists, and could lower Medicaid’s rate of improper payments.[80] More robust asset recovery measures—ensuring Medicaid remains the payer of last resort, not that of first instance—would help preserve scarce state and federal resources for those who need them most.[81]

The state of Rhode Island demonstrates the power of a comprehensive waiver to transform a Medicaid program. Its global compact waiver, approved in the waning days of President George W. Bush’s Administration in January 2009, allowed that state to improve Medicaid by providing more, better, and more timely care to beneficiaries. Thanks to the global compact waiver, Rhode Island actually reduced its per beneficiary Medicaid costs in absolute (i.e., before-inflation) terms over a four-year period[82]—and did so not by cutting access to care, but by improving it.[83] The success of the Rhode Island experiment illustrates the way in which Medicaid reform, done right, can simultaneously save money and improve health—a lesson the legislature should look to bring to Louisiana.

 

Conclusion

Given the state’s structural budget shortfall, and the significant costs associated with Medicaid expansion, Louisiana stands at a turning point. The legislature could continue down their current path, and hope that yet another series of tax increases will sate the growing health care costs that threaten to consume the state’s entire budget.

Thankfully, legislators have another option. Unwinding the Medicaid expansion gradually, while laying the groundwork to submit a comprehensive Medicaid waiver request to CMS, would in combination help turn the fiscal tide. Freezing Medicaid enrollment for able-bodied adults would re-direct the program towards the most vulnerable in society—those for whom Medicaid was originally designed. Likewise, a comprehensive waiver would re-orient and update Medicaid for a 21st century health care system, saving money by providing better care.

Given the two options, the choice for Louisiana seems clear. The state should use the flexibility promised by Washington to unwind Medicaid expansion for the able-bodied, and modernize and re-orient the program toward the program’s original intended beneficiaries. By so doing, the state can go a long way towards resolving its structural fiscal shortfalls, while also improving the care provided to some of Louisiana’s most vulnerable residents.

 

[1] Melinda Deslatte, “Louisiana Governor Offers Tax Ideas to Close $1 Billion Budget Gap,” Associated Press December 18, 2017, https://apnews.com/58833e0c265f4de6b26e465004c01c25/Louisiana-governor-offer.

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

[3] Louisiana Department of Health, “Louisiana Medicaid Expansion Dashboard,” http://www.ldh.la.gov/HealthyLaDashboard.

[4] Litten, “Louisiana’s Medicaid Expansion Enrollment Could Grow.”

[5] Jonathan Ingram and Nicholas Horton, “Obamacare Expansion Enrollment Is Shattering Projections,” Foundation for Government Accountability, November 16, 2016, https://thefga.org/download/ObamaCare-Expansion-is-Shattering-Projections.PDF, p. 5.

[6] Jonathan Ingram and Nicholas Horton, “The Obamacare Expansion Enrollment Explosion,” Foundation for Government Accountability,” April 20, 2015, https://thefga.org/wp-content/uploads/2015/04/ExpansionEnrollmentExplosion-Final3.pdf.

[7] Ingram and Horton, “Obamacare Expansion Enrollment Is Shattering Projections.”

[8] Centers for Medicare and Medicaid Services, “2017 Effectuated Enrollment Snapshot,” June 12, 2017, https://downloads.cms.gov/files/effectuated-enrollment-snapshot-report-06-12-17.pdf. Effectuated enrollment represents coverage for which individuals have both selected an insurance plan and paid at least one month’s premium.

[9] Congressional Budget Office, estimate of H.R. 4872, Health Care and Education Reconciliation Act, in concert with H.R. 3590, Patient Protection and Affordable Care Act, March 20, 2010, https://www.cbo.gov/sites/default/files/111th-congress-2009-2010/costestimate/amendreconprop.pdf, Table 4, p. 21.

[10] Avalere Health, “The State of Exchanges: A Review of Trends and Opportunities to Grow and Stabilize the Market,” report for Aetna, October 2016, http://go.avalere.com/acton/attachment/12909/f-0352/1/-/-/-/-/20161005_Avalere_State%20of%20Exchanges_Final_.pdf, Figure 3, p. 6.

[11] Ibid.

[12] National Association of State Budget Officers, “The State Expenditure Report,” July 1987, https://higherlogicdownload.s3.amazonaws.com/NASBO/9d2d2db1-c943-4f1b-b750-0fca152d64c2/UploadedImages/SER%20Archive/ER_1987.PDF, Medicaid Expenditures as a Percentage of Total Expenditures, p. 30.

[13] National Association of State Budget Officers, “State Expenditure Report,” November 2016, https://higherlogicdownload.s3.amazonaws.com/NASBO/9d2d2db1-c943-4f1b-b750-0fca152d64c2/UploadedImages/SER%20Archive/State%20Expenditure%20Report%20(Fiscal%202014-2016)%20-%20S.pdf, Table 5: State Spending by Function as a Percentage of Total State Expenditures, p. 13.

[14] National Association of State Budget Officers, “The State Expenditure Report.”

[15] National Association of State Budget Officers, “Fiscal Survey of States: Spring 2014,” https://higherlogicdownload.s3.amazonaws.com/NASBO/9d2d2db1-c943-4f1b-b750-0fca152d64c2/UploadedImages/Fiscal%20Survey/NASBO%20Spring%202014%20Fiscal%20Survey%20(security).pdf, p. xi.

[16] Pew Charitable Trusts, “Fiscal 50: State Trends and Analysis,” http://www.pewtrusts.org/en/multimedia/data-visualizations/2014/fiscal-50#ind7, Change in State Medicaid Spending as a Share of Own-Source Revenue, 2000 and 2015.

[17] Ibid., http://www.pewtrusts.org/en/multimedia/data-visualizations/2014/fiscal-50#ind1, Percentage of State Revenue from Federal Funds, Fiscal Year 2015.

[18] For an analysis of the ways that the CMS actuary and the Congressional Budget Office have changed their baseline projections of Medicaid spending over time, see Brian Blase, “Evidence Is Mounting: The Affordable Care Act Has Worsened Medicaid’s Structural Problems,” Mercatus Center, September 2016, https://www.mercatus.org/system/files/mercatus-blase-medicaid-structural-problems-v1.pdf, pp. 15-20.

[19] Centers for Medicare and Medicaid Services Office of the Actuary, “2016 Actuarial Report on the Financial Outlook for Medicaid,” report to Congress, 2016, https://www.medicaid.gov/medicaid/financing-and-reimbursement/downloads/medicaid-actuarial-report-2016.pdf, p. 22.

[20] Centers for Medicare and Medicaid Services Office of the Actuary, “2014 Actuarial Report on the Financial Outlook for Medicaid,” report to Congress, 2014, https://www.medicaid.gov/medicaid/financing-and-reimbursement/downloads/medicaid-actuarial-report-2014.pdf, pp. 36-38.

[21] Centers for Medicare and Medicaid Services Office of the Actuary, “2015 Actuarial Report on the Financial Outlook for Medicaid,” report to Congress, 2015, https://www.medicaid.gov/medicaid/financing-and-reimbursement/downloads/medicaid-actuarial-report-2015.pdf, p. 27.

[22] Cited in Jeanie Donovan, “Setting the Record Straight on Medicaid,” Louisiana Budget Project, August 4, 2017, http://www.labudget.org/lbp/2017/08/setting-the-record-straight-on-medicaid/.

[23] Ibid.

[24] 42 U.S.C. 1396d(y)(1), as codified by Section 2001(a) of the Patient Protection and Affordable Care Act, P.L. 111-148.

[25] Christina Cassidy, “Rising Cost of Medicaid Expansion is Unnerving Some States,” Associated Press October 5, 2016, http://bigstory.ap.org/article/4219bc875f114b938d38766c5321331a/rising-cost-medicaid-expansion-unnerving-some-states.

[26] Ibid.

[27] Christina Cassidy, “Medicaid Enrollment Surges, Stirs Worry about State Budgets,” Associated Press July 19, 2015, http://www.bigstory.ap.org/article/c158e3b3ad50458b8d6f8f9228d02948/medicaid-enrollment-surges-stirs-worry-about-state-budgets.

[28] Ibid.

[29] “The State Expenditure Report,” Primary and Secondary Education Expenditures as a Percentage of Total Expenditures, Higher Education Expenditures as a Percentage of Total State Expenditures, and Transportation Expenditures as a Percentage of Total State Expenditures; “State Expenditure Report,” Table 5: State Spending by Function.

[30] United States Treasury, “The Debt to the Penny and Who Holds It,” total public debt outstanding as of October 26, 2017, https://www.treasurydirect.gov/NP/debt/current.

[31] White House Office of the Press Secretary, “Fact Sheet: The President’s Framework for Shared Prosperity and Shared Fiscal Responsibility,” April 13, 2011, https://obamawhitehouse.archives.gov/the-press-office/2011/04/13/fact-sheet-presidents-framework-shared-prosperity-and-shared-fiscal-resp.

[32] NFIB v. Sebelius, 567 U.S. 519 (2012), https://www.supremecourt.gov/opinions/11pdf/11-393c3a2.pdf; Sam Baker, “White House Drops Support for Major Medicaid Cut,” The Hill December 10, 2012, http://thehill.com/policy/healthcare/272041-white-house-drops-support-for-major-medicaid-cut; Centers for Medicare and Medicaid Services, “Frequently Asked Questions on Exchanges, Market Reforms, and Medicaid,” December 10, 2012, https://www.cms.gov/CCIIO/Resources/Files/Downloads/exchanges-faqs-12-10-2012.pdf.

[33] 42 U.S.C. 1397ee(b), as amended by Section 2101(a) of PPACA.

[34] Department of Health and Human Services, “Federal Financial Participation in State Assistance Expenditures,” Federal Register November 15, 2016, pp. 80078-80080, Table 1, https://www.gpo.gov/fdsys/pkg/FR-2016-11-15/pdf/2016-27424.pdf.

[35] Ibid.

[36] Section 3005 of the HEALTHY KIDS Act, P.L. 115-120.

[37] See also 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.

[38] “Federal Financial Participation in State Assistance Expenditures.”

[39] 42 U.S.C. 1396d(y)(1), as codified by Section 2001(a) of PPACA.

[40] Genevieve M. Kenney et al., “Opting in to the Medicaid Expansion Under the ACA: Who Are the Uninsured Adults Who Could Gain Health Insurance Coverage?” Urban Institute, August 2012, http://www.urban.org/sites/default/files/alfresco/publication-pdfs/412630-Opting-in-to-the-Medicaid-Expansion-under-the-ACA.PDF, p. 9, Appendix Table 2.

[41] Ibid.

[42] Kaiser Family Foundation, “Waiting List Enrollment for Medicaid Section 1915(c) Home- and Community-Based Services Waivers,” Kaiser Commission on Medicaid and the Uninsured 2015 survey, http://kff.org/health-reform/state-indicator/waiting-lists-for-hcbs-waivers/?currentTimeframe=0&sortModel=%7B%22colId%22:%22Location%22,%22sort%22:%22asc%22%7D.

[43] Bobby Jindal, “Obamacare Is Anything But Compassionate,” Politico February 9, 2014, http://www.politico.com/magazine/story/2014/02/obamacare-costs-jobs-hurts-most-vulnerable-103299?paginate=false.

[44] Louisiana Department of Health and Hospitals, “Medicaid Waiver Services,” http://www.dhh.la.gov/index.cfm/page/1555.

[45] Jason Pederson, “Waiver Commitment Wavering,” KATV June 15, 2016, http://katv.com/community/7-on-your-side/waiver-commitment-wavering.

[46] Chris Jacobs, “Obamacare Takes Care from Disabled People to Subsidize Able-Bodied, Working-Age Men,” The Federalist November 18, 2016, http://thefederalist.com/2016/11/18/obamacare-takes-care-disabled-people-subsidize-able-bodied-working-age-men/.

[47] Ibid.

[48] Nicholas Horton, “Illinois’ Medicaid Expansion Enrollment Continues to Climb, Putting Vulnerable at Risk,” Illinois Policy Institute, November 1, 2016, https://www.illinoispolicy.org/illinois-medicaid-expansion-enrollment-continues-to-climb-putting-vulnerable-at-risk/.

[49] Nicholas Horton, “Hundreds on Medicaid Waiting List in Illinois Die While Waiting for Care,” Illinois Policy Institute, November 23, 2016, https://www.illinoispolicy.org/hundreds-on-medicaid-waiting-list-in-illinois-die-while-waiting-for-care-2/.

[50] Scott Gottlieb, “Medicaid Is Worse than No Coverage at All,” Wall Street Journal March 10, 2011, http://www.wsj.com/articles/SB10001424052748704758904576188280858303612.

[51] Joanna Bisgaier and Karin Rhodes, “Auditing Access to Specialty Care for Children with Public Insurance,” New England Journal of Medicine June 16, 2011, http://www.nejm.org/doi/full/10.1056/NEJMsa1013285.

[52] Stephen Zuckerman, et al., “Medicaid Physician Fees after the ACA Primary Care Fee Bump,” Urban Institute March 2017, https://www.urban.org/sites/default/files/publication/88836/2001180-medicaid-physician-fees-after-the-aca-primary-care-fee-bump_0.pdf, Table 1, p. 5.

[53] Ibid.

[54] Ibid.

[55] Kaiser Family Foundation, “Births Financed by Medicaid,” State Health Facts, https://www.kff.org/medicaid/state-indicator/births-financed-by-medicaid/?currentTimeframe=0&sortModel=%7B%22colId%22:%22%25%20Births%20Financed%20by%20Medicaid%22,%22sort%22:%22desc%22%7D.

[56] Katherine Baicker, et al., “The Oregon Experiment—Effects of Medicaid on Clinical Outcomes,” New England Journal of Medicine May 2, 2013, http://www.nejm.org/doi/full/10.1056/NEJMsa1212321.

[57] Amy Finklestein et al., “Effect of Medicaid Coverage on ED Use—Further Evidence from Oregon’s Experiment,” New England Journal of Medicine October 20, 2016, http://www.nejm.org/doi/full/10.1056/NEJMp1609533.

[58] Statement by DeAnn Friedholm, Consumers Union, at Alliance for Health Reform Briefing on “Affordability and Health Reform: If We Mandate, Will They (and Can They) Pay?” November 20, 2009, http://www.allhealthpolicy.org/wp-content/uploads/2016/12/TranscriptFINAL-1685.pdf, p. 40.

[59] Vanessa Fuhrmans, “Note to Medicaid Patients: The Doctor Won’t See You,” Wall Street Journal July 19, 2007, https://www.wsj.com/articles/SB118480165648770935.

[60] Congressional Budget Office, “The Budget and Economic Outlook: 2014 to 2024,” February 2014, http://cbo.gov/sites/default/files/cbofiles/attachments/45010-Outlook2014_Feb.pdf, Appendix C: Labor Market Effects of the Affordable Care Act: Updated Estimates, pp. 117-27.

[61] Edward Harris and Shannon Mok, “How CBO Estimates Effects of the Affordable Care Act on the Labor Market,” Congressional Budget Office Working Paper 2015-09, December 2015, https://www.cbo.gov/sites/default/files/114th-congress-2015-2016/workingpaper/51065-ACA_Labor_Market_Effects_WP.pdf, p. 12.

[62] Kenney, “Opting in to the Medicaid Expansion,” Appendix Table 1, p. 8.

[63] Cited in Nic Horton and Jonathan Ingram, “The Future of Medicaid Reform: Empowering Individuals Through Work,” Foundation for Government Accountability, November 14, 2017, https://thefga.org/wp-content/uploads/2017/11/The-Future-of-Medicaid-Reform-Empowering-Individuals-Through-Work.pdf, p. 4.

[64] Ibid.

[65] Department of Health and Human Services, notice regarding “Annual Update of the HHS Poverty Guidelines,” Federal Register January 18, 2018, https://www.gpo.gov/fdsys/pkg/FR-2018-01-18/pdf/2018-00814.pdf, , pp. 2642-44.

[66] Craig Garthwaite, Tal Gross, and Matthew Notowidigdo, “Public Health Insurance, Labor Supply, and Employment Lock,” National Bureau of Economic Research, NBER Working Paper 19220, July 2013, http://www.nber.org/papers/w19220.

[67] Chris Jacobs, “Putting Obamacare in a Deep Freeze,” National Review December 7, 2016, http://www.nationalreview.com/article/442820/obamacare-repeal-replace-enrollment-freeze-first-step.

[68] Kim Palmer, “Ohio Lawmakers Vote to Freeze Medicaid Expansion,” Reuters June 28, 2017, https://www.reuters.com/article/us-ohio-budget/ohio-lawmakers-vote-to-freeze-medicaid-expansion-idUSKBN19K0B8; Caleb Taylor, “House Passes Medicaid Expansion Freeze,” The Arkansas Project March 1, 2017, http://www.thearkansasproject.com/house-passes-medicaid-expansion-freeze/.

[69] Foundation for Government Accountability, “Freezing Medicaid Expansion Enrollment Will Save Taxpayers More Than Half a Trillion,” February 2017, https://thefga.org/wp-content/uploads/2017/02/MedEx-Freeze-Savings-Table.pdf.

[70] Letter by Health and Human Services Secretary Tom Price and Centers for Medicare and Medicaid Services Administrator Seema Verma to state governors regarding Medicaid reform, March 14, 2017, https://www.hhs.gov/sites/default/files/sec-price-admin-verma-ltr.pdf.

[71] See for instance Chris Jacobs, “Reforming Medicaid to Serve Wyoming Better,” Wyoming Liberty Group Wyoming Policy Review Issue 101, June 2017, https://wyliberty.org/images/PDFs/Wyoming_Policy_Review-Jacobs-Reforming_Medicaid-101.pdf, and Naomi Lopez Bauman and Lindsay Boyd, “Medicaid Waiver Toolkit,” State Policy Network, August 2017.

[72] 42 U.S.C. 1396u-8, as codified by Section 6082 of the Deficit Reduction Act of 2005, P.L. 109-171; Section 613 of the Children’s Health Insurance Program Reauthorization Act of 2009, P.L. 111-3; Josh Archambault and Nic Horton, “Right to Shop: The Next Big Thing in Health Care,” Forbes August 5, 2016, http://www.forbes.com/sites/theapothecary/2016/08/05/right-to-shop-the-next-big-thing-in-health-care/#6f0ebcd91f75.

[73] Steven Burd, “How Safeway is Cutting Health Care Costs,” Wall Street Journal June 12, 2009, http://www.wsj.com/articles/SB124476804026308603.

[74] Louisiana currently ranks fifth in the nation for adult obesity, with an obesity rate of 35.5%. See Trust for America’s Health, “The State of Obesity,” https://stateofobesity.org/states/la/.

[75] 42 U.S.C. 1397ee(c)(10)(B)(ii)(II) and 42 U.S.C. 1396e-1(b)(2)(B), as codified by Section 301 of CHIPRA.

[76] See for instance testimony of Patti Killingsworth, TennCare Chief of Long-Term Supports and Services, before the Commission on Long-Term Care on “What Would Strengthen Medicaid LTSS?” August 1, 2013, http://ltccommission.org/ltccommission/wp-content/uploads/2013/12/Patti-Killingsworth-Testimony.pdf. The author served as a member of the Commission.

[77] Mattie Quinn, “On Medicaid, States Won’t Take Feds’ No for an Answer,” Governing October 11, 2016, http://www.governing.com/topics/health-human-services/gov-medicaid-waivers-arizona-ohio-cms.html.

[78] Centers for Medicare and Medicaid Services, “Opportunities to Promote Work and Community Engagement Among Medicaid Beneficiaries,” State Medicaid Director letter SMD-18-002, January 11, 2018, https://www.medicaid.gov/federal-policy-guidance/downloads/smd18002.pdf

[79] Louisiana Office of the Attorney General, “Over $2 Million in Medicaid Fraud Uncovered in New Orleans,” October 16, 2017, https://www.ag.state.la.us/Article/3470/5.

[80] Jonathan Ingram, “Stop the Scam: How to Prevent Welfare Fraud in Your State,” Foundation for Government Accountability, April 2, 2015, https://thefga.org/wp-content/uploads/2015/04/Stop-The-Scam-research-paper.pdf.

[81] See for instance Government Accountability Office, “Medicaid: Additional Federal Action Needed to Further Improve Third Party Liability Efforts,” GAO Report GAO-15-208, January 2015, http://gao.gov/assets/670/668134.pdf.

[82] Testimony of Gary Alexander, former Rhode Island Secretary of Health and Human Services, on “Strengthening Medicaid Long-Term Supports and Services” before the Commission on Long Term Care, August 1, 2013, http://ltccommission.org/ltccommission/wp-content/uploads/2013/12/Garo-Alexander.pdf.

[83] Lewin Group, “An Independent Evaluation of Rhode Island’s Global Waiver,” December 6, 2011, http://www.ohhs.ri.gov/documents/documents11/Lewin_report_12_6_11.pdf.