Quin Hillyer: Don’t fall for Obamacare’s Medicaid bait

Louisiana’s editorial boards and other opinion leaders all seem to agree that Gov. Bobby Jindal is wrong to reject the Medicaid expansion offered by Obamacare. But Jindal is right. Obamacare’s Medicaid offerings glitter like fool’s gold.

Before doing the math, let’s study some history. It’s not just that President Barack Obama has broken almost every promise he made about Obamacare, from driving premiums down to keeping your doctor if you so desire — although the overall Obamacare debacle certainly should raise red flags about its Medicaid component. It’s also that Louisiana, in particular, has reason to distrust the feds, whichever party is in charge, when it comes to programs where state and federal governments share the costs.

Jindal had direct experience with this proclivity. When he became Louisiana’s Secretary of Health and Hospitals in 1996, the state faced a catastrophic budget gap because the federal government changed the rules for a Medicaid/Medicare payment system called “Disproportionate Share.” Sure, Louisiana had gamed the system — but it did so under the rules set by the feds. When the rules changed, the state was left high and dry. Jindal himself devised the plan Louisiana used to avoid disaster, and sold it to the federal Centers for Medicare and Medicaid Services with the help of the state’s then-powerful congressional delegation.

Salvaging anything from that near-disaster was, as they say, “a close-run thing.”

The details aren’t crucial now; what’s important is that Jindal knows full well that Congress and national agencies can’t be trusted to set the same rules tomorrow that they promise today. This has a huge bearing on Obamacare’s promises to cover 90 percent of the costs of Medicaid expansion. Simple arithmetic combined with painful experience says those promises are budgetarily unsustainable.

Even at 90 percent federal coverage, Louisiana can’t afford the other 10 percent. The Jindal administration estimates the expansion would cost Louisiana $1.7 billion in the first ten years. The estimate is well in line with those of similarly sized states, such as Alabama. It may even be a low-ball figure. The Pelican Institute in New Orleans notes that other states’ earlier experiments along similar lines proved hideously expensive. For instance, “Arizona’s Medicaid expansion from 2000 to 2008 cost 400 percent more than expected.”

Meanwhile, perish the thought that the other 90 percent, even if actually delivered, is somehow “free money.” The vast majority of those who would enter the expanded Medicaid system aren’t the uninsured, but those who would merely be switching over from existing, private insurance. (Jindal’s team pegs this number of likely switchers at 171,000. That’s a big number, but not unreasonable. Previous expansions in Maine, Oregon, Delaware and, again, Arizona, saw this same phenomenon.) Smaller risk pools in the private insurance market are likely to result in higher premiums for everybody not on a government plan, while the momentum towards government-financed health care will put greater burdens on taxpayers.

For most Louisiana workers, that would be a nasty double-whammy.

The results for those newly on Medicaid wouldn’t be pretty, either. Numerous studies show that Medicaid provides substandard care – and it actually narrows choices, as more and more doctors refuse to accept Medicaid patients.

Jindal makes another argument, politically potent and somewhat relevant, even if it relies on some inferential logic. Writing in the publication Politico, he notes that Obamacare offers to cover a greater portion of Medicaid expansion than the federal government covers for existing Medicaid payments to the states. Thus, the existing Medicaid populations, such as the disabled, effectively would be getting a lesser deal.

Many of these patients lack current access to “community-based services.” Jindal reasons that if the federal government does have the wherewithal to spend more on Medicaid, the extra money should go to the disabled rather than to the able-bodied workers covered by the Obamacare expansion.

If this isn’t exactly taking existing money away from the most vulnerable, it still is valid to say Obamacare’s Medicaid scheme would misallocate potential funds away from needy populations.

Louisiana is better to remain unencumbered by the many strings attached to Obamacare, and instead concentrate on its own, ongoing reforms that promise better care at lower cost. But those successful reforms are a story for another day.

New Orleans native Quin Hillyer is a contributing editor for National Review. You can follow him on Twitter, @QuinHillyer. His email address is qhillyer@theadvocate.com.