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Recent evidence continues to support expanding health coverage

Posted on May 7, 2013

A new plan is emerging in the Louisiana Legislature to extend health coverage using federal Medicaid revenue available as part of the health care reform law. Instead of simply expanding the current Medicaid program, the state would use Medicaid dollars to help uninsured adults buy private coverage. But the Jindal administration remains opposed to this new plan.

A recent essay by the Pelican Institute for Public Policy attempts to explain why expanding health coverage is a bad idea. While opponents of this opportunity raise some valid concerns, they are outweighed by the clear evidence that expanding coverage would make Louisiana healthier and improve the state’s economy.

Coverage improves health outcomes and reduces mortality

The Pelican Institute cites a recent study  in the New England Journal of Medicine (NEJM) as evidence that Medicaid coverage does not improve health outcomes. But that study found that giving coverage to a previously uninsured person reduced the incidence of depression by 30 percent and increased the likelihood that diabetes would be diagnosed and treated — tangible benefits that not only improve the quality of life, but help decrease the need for more costly care in the long run.

Even more significantly, a separate study published in the same journal last year found that states that voluntarily expanded Medicaid to uninsured adults saw a decrease in mortality rates — making coverage expansion a literal life and death decision.

The research is clear that any health coverage — be it Medicaid or private insurance — brings health benefits and is far preferable to being uninsured.

This is also common sense. When the uninsured gain coverage, they are more likely to have access to a regular primary care doctor and prescription drugs, and less likely to face financial stress or even bankruptcy due to medical bills.

Expansion is an affordable option, while the cost of doing nothing is too high

The cost of expanding coverage is certainly a concern, and the Pelican Institute is right to focus on both the short-term and the long-term costs. But the fiscal argument in favor of expansion is strong.

There is universal agreement — from independent organizations, the Legislative Fiscal Office and even the Department of Health and Hospitals — that expanding Medicaid will save money in the short term. The LFO — which has the official word on budget matters — said Louisiana will save at least $532 million over the first five years, including $105 million in the upcoming 2013-14 budget cycle.

While the state could incur some  costs in the out years, these are likely to be modest due to the very favorable federal match of 90 percent, even as the state realizes the significant benefits of a healthier population, better health care and a stronger economy.

Another key consideration, which many expansion opponents fail to account for, is the cost of doing nothing. The federal Disproportionate Share Hospital (DSH) dollars that Louisiana uses to finance uninsured care are on track to be reduced, threatening the financial viability of the charity hospital partnerships and many rural hospitals. Without expansion revenue — which would more than offset cuts to DSH — the long-term sustainability of Louisiana’s hospitals is at risk, which would ultimately harm patients.

Expanding coverage is the right option for Louisiana

The Pelican Institute says that rejecting the Medicaid opportunity is a chance for Louisiana to “veto” federal spending and reduce the federal budget. But state policymakers were elected to focus on the best interest of Louisiana and the state budget, not Washington politics. The evidence is clear that expanding coverage will improve health care for Louisiana’s families, reduce mortality rates and help stabilize and strengthen the private insurance market and make sure doctors and hospitals are paid for the important services they provide. Expansion will generate millions in state budget savings over the next decade and boost the state economy, while the costs to Louisiana’s health care system of doing nothing are too high for the state to bear.

Policymakers can move forward with a state-focused, innovative coverage expansion

Louisiana has an opportunity under the Affordable Care Act to craft a unique plan that helps the uninsured gain private insurance coverage. Failure to act will mean devastating cuts to Louisiana’s public and private hospitals. The plans being considered by the Legislature are only a first step, and more reforms will be needed in the future to continue improving Louisiana’s health-care rankings. But despite the issues raised by opponents, expanding coverage now is clearly the right choice for Louisiana.

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