Expanding Medicaid had a $1.7 billion impact on Louisiana’s economy, according to a report commissioned by the Louisiana Department of Health.
Expansion also supports more than 14,000 jobs statewide and $889 million in personal earnings, the report says.
A prominent critic of the department said the report corrected an error made last year in a similar study but still questioned the new report’s methodology.
Three professors in LSU’s Public Administration Institute prepared the report, including Jim Richardson, who is stepping down this year from his post on the state’s Revenue Estimating Conference.
“While the intent of Medicaid expansion was to improve healthcare for non-elderly adults, a side effect is an expected positive impact on the overall economy,” the authors say.
Gov. John Bel Edwards opted Louisiana into Medicaid expansion, which is mostly funded by the federal government under the Affordable Care Act, at the beginning of his administration in 2016. Louisiana residents making up to 138 percent of the federal poverty level became eligible for the taxpayer-funded health insurance program.
The state’s uninsured rate for non-elderly adults has declined from 18 percent in 2015 to 13 percent in 2018.
The new federal dollars that paid for the expansion are the source of the economic impact. However, there are trade-offs, the report’s authors concede. For example, at least some of the adults now in the Medicaid program otherwise would have bought policies themselves with the help of federal subsidies on the insurance exchange marketplace.
“Even when taking the most conservative methodological approach, one which assumes that all people with incomes below 138 percent of the federal poverty level who left the market exchange subsequently joined Medicaid expansion, the researchers found that Medicaid expansion is a significant boon to the Louisiana economy,” says the Department of Health in a prepared statement touting the study. “The researchers also point out that improved labor force participation rates should be one of the long-term impacts of Medicaid expansion, because when people have access to appropriate health care they are more likely to be in the workforce.”
Chris Jacobs, senior fellow with the fiscally conservative Pelican Institute for Public Policy, criticized a similar LDH-backed study released last year for not taking into account people who forfeited federal subsidies available on the exchange when they joined Medicaid after expansion. The new paper fails to retract the “inflated claims” made in the last one, he said.
Jacobs said the new paper apparently still does not quantify instances where federal dollars substituted for dollars previously spent by individuals or employers, thereby inflating the purported 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, he said. The institute found that tens of thousands of Louisianans who were already enrolled in private health insurance plans left their plans and enrolled in Medicaid under expansion.
“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,” Jacobs says.
The Pelican Institute also has been critical of fraud in the program. In 2018, Legislative Auditor Daryl Purpura issued three audit reports identifying large-scale Medicaid fraud in excess of $100 million annually. And an institute investigation found that more than 1,600 individuals earning six-figure incomes enrolled in Medicaid after expansion. The state said it has since taken steps to reduce fraud.