By Bob Williams and Joe Luppino-Esposito
Everyone knows that the Affordable Care Act (ACA), or “Obamacare,” has not worked out as originally planned. State officials, however, still face considerable pressure to accept Medicaid expansion. Louisiana’s leaders must continue to resist the plan and come up with an alternative.
The Medicaid expansion portion of the ACA ordered all 50 states to add millions of able-bodied adults to the Medicaid rolls. The U.S. Supreme Court ruled in 2012 that states could not be forced into the program, thus shifting the decision from the federal government to state legislatures. Just over half of all states have accepted Medicaid expansion in some form.
Proponents of Medicaid expansion support “creative” plans. They hope that they can convince enough fiscally responsible state officials, including those in Louisiana, that the “private option” is the way to go. Arkansas’s state officials have already fallen for it. This deceptively named policy hints at free market principles, though it has none.
“Private option” Medicaid expansion merely changes how the government hands out benefits. Rather than funding insurance through the state’s Medicaid program, private insurance companies administer the federal funding and direct new enrollees to any “silver plan” on the health exchanges. Though this eliminates the problem of sub-par Medicaid care, it will result in a nightmare for the state’s finances.
The hidden problem with the “private option” is in the details of its approval. The plan is a customized option for Medicaid expansion, and all special exceptions require a waiver from the federal government. To limit its financial liability, the federal government capped the average monthly per-person costs of the plan. Experts predicted the average costs would be $437 per month, and the federal government placed the cap at $477.63. This January, actual costs in Arkansas ran right up to the line–$476.59 per person. By February, the average cost ran past the line ($483.15) and March was even worse ($485.77).
Arkansas taxpayers will likely be on the hook for the difference. The promised “free” Medicaid is going to cost quite a bit. Forget about the “savings” that proponents predicted. If Louisiana lawmakers adopt this model, the state will likely wind up with the same end results.
Louisiana’s reliance on the federal government for a large portion of it s general revenue makes the “private option” Medicaid expansion particularly risky. State Budget Solutions found that in fiscal year 2012, Louisiana received 43.95% of its general revenue directly from the federal government. That’s the second highest percentage in the country, behind only Mississippi. The Pelican State already needs $11 billion from D.C. Increasing that number in a time of federal budget cuts is unwise.
Louisiana’s Bayou Health is a better alternative to Medicaid that will bring more effective health care to state residents. Bayou Health, started in 2012, allows enrollees to choose from one of five plans, depending on their specific needs. The program provides better care with a localized approach for the most vulnerable Louisianans. This is similar to Florida’s successful Medicaid Cure program, which will save Florida $1 billion annually when adopted statewide.
Bayou Health’s success can be seen in the state’s savings: 3.5%. in the first year of fully implementing the program. Current projections show that there will be no increase over the next five years. Compare that to the Arkansas “private option,” which has already exceeded cost limits.
Rather than sit back and let the federal government dictate health insurance decisions for state residents, Louisiana state officials must be proactive and build on their successful state-based program. This will provide quality care to those who truly need it as well as help Louisiana break free of federal dominance over its finances and health care.
Bob Williams is president of State Budget Solutions, a non-partisan organization dedicated to fiscal responsibility and pension reform. Williams is a former Washington state legislator and gubernatorial candidate.
Joe Luppino-Esposito is an editor and counsel at State Budget Solutions, focusing on health care, public employee pensions, labor law, and state budget reforms. Joe is a licensed attorney in Virginia and the District of Columbia.