DHH Report: Medicaid Expansion Could Save Louisiana Millions

by Steve Spires

A new report from the state Department of Health and Hospitals finds that extending Medicaid coverage to low-income adults could potentially save Louisiana hundreds of millions of dollars over the next decade. The report is an update of a three-year old analysis that estimated a much higher cost to the state, and provides fresh evidence that Medicaid expansion is the right choice for Louisiana.

The health department projects the 10-year cost of new coverage and administrating the program would come to between $1.14 billion and $1.39 billion. But the state could save between $1.35 billion and $1.57 billion over the same time frame, making Medicaid expansion a break even proposition for the state budget—if not a source of net savings.

The state’s findings are similar to those in a February report by the Louisiana Budget Project, which also found that Louisiana could expand its Medicaid program to cover up to 400,000 low-income adults at little or no cost to state taxpayers.

According to the health department’s report, Medicaid expansion could save the state as much as $367.5 million over the next 10 years. On the other hand, in DHH’s “worst case” scenario, expansion could cost the state as much as $1.71 billion. But that higher cost scenario assumes that the state would pay much higher rates under Medicaid than today. When that assumption is removed from the estimate, the cost drops to a mere $40 million at most, and Louisiana taxpayers could still save as much as $150 million.

Medicaid expansion would allow adults earning up to 138 percent of the federal poverty level to qualify for health coverage. The federal government will pay 93 percent of the cost for the first 10 years, with the state never having to cover more than 10 percent of the cost.

Should Louisiana agree to accept this federal money, it would provide coverage to hundreds of thousands of Louisianans who currently go without. The new federal dollars would help create Louisiana jobs and ensure that doctors, hospitals and other health-care providers are paid for their services.

But so far, Gov. Jindal has refused to accept this opportunity, at the same time that Louisiana is cutting support for its public hospital system.

The health department’s analysis is the most comprehensive to date of what Medicaid expansion would mean for the state budget, building off past analyses done at the national level by the Kaiser Family Foundation and the Urban Institute, and at the state level by LBP and the Public Affairs Research Council, among others.

The timing of the analysis is critical, as it comes near the start of the annual legislative session. At a time when Louisiana is struggling to balance its budget, the health department estimates that expansion could save the state between $14 million and $78 million in the last six months of the 2013-14 fiscal year alone. Those are savings that can be plugged into other parts of the budget, such as higher education, which are straining under the weight of repeated cuts.

While it is always difficult to estimate costs and savings over a 10-year period, it is now clear that Medicaid expansion is an affordable option for Louisiana. Furthermore, there is no time for delay, as DHH’s numbers show that failing to move ahead with expansion now will mean leaving millions in federal revenue on the table,

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