State data reveals major issue with Louisiana Medicaid expansion

Please click to view the full detailed solutions paper from the Pelican Institute for Public Policy (Pelican Institute).

Today, in its newest deep dive paper, the Pelican Institute revealed that since implementing Medicaid expansion, tens of thousands of Louisianans have dropped private health insurance coverage to enroll in Medicaid, costing the program more than $145 million per year.

To assess the breadth of Louisiana’s Medicaid crowd out, a term which refers to residents who have dropped their existing coverage to enroll in Medicaid expansion, the Pelican Institute filed a public records request with the Louisiana Department of Health. The data from LDH showed that for much of 2016 and 2017, several thousand individuals per month dropped their existing coverage for Medicaid expansion, which makes up a significant portion of the average 15,000 individuals per month enrolling in the program in 2017.

In 2015, the Legislative Fiscal Office assumed that the cost to the state to cover individuals with prior coverage would fall between $900 million and $1.3 billion. Recent testimony from LDH staff indicated that current spending on the average expansion enrollee is approximately $6,286.20 per year. This means that Louisianans who dropped private coverage for Medicaid expansion could be costing state and federal taxpayers $461.6 million in this fiscal year alone.

A key issue arises from the methodology being used by the state to calculate the percentage of the crowd out population. In August 2017, instead of calculating crowd out to equal the percentage of Medicaid enrollees who dropped their private coverage to enroll, LDH divided the number of Medicaid expansion enrollees whose private coverage policies ended within 60 days of their enrollment by the total expansion enrollment population of 442,674. This yielded a crowd out rate of 1.3 percent. However, an accurate calculation would divide the number of new enrollees who dropped private coverage in a given month by the total of new enrollees in that same month.

Using LDH data, the Pelican Institute found that in August 2017, 13,955 individuals enrolled in expansion and of that, 4,957 individuals had dropped private coverage in the prior 30 days. Dividing these numbers equates to a potential crowd out rate of 35.5 percent, which is far higher than the one-to-two percent figure cited by LDH.

Chris Jacobs, senior fellow with the Pelican Institute, says Louisiana’s working families need to be aware of the real costs of Medicaid expansion, adding this and other issues with the program point to a need for greater transparency and integrity throughout the system.

“While problems persist with the inaccurate calculations and increasing costs to taxpayers due Louisiana’s Medicaid crowd out, another major, less-discussed issue is the fact that more than 1,600 individuals enrolled in the expansion population earn six-figure incomes,” Jacobs said. “Individuals earning $100,000 or more while enrolling in Medicaid, combined with LDH’s failure to address the crowd out problem, point to the need for fundamental reform to Louisiana’s Medicaid program. Louisianans elect their leaders to serve as smart stewards of scarce taxpayer dollars, but the increasing number of red flags surrounding the Medicaid system raise questions about LDH’s fulfillment of this crucial function.”

In the coming months, the Pelican Institute will continue examining data to inform and educate taxpayers and elected leaders on important findings surrounding Louisiana’s Medicaid expansion population.