Friday, December 18, 2015

Friday, December 18, 2015

Louisiana should not wait on Medicaid expansion; Rich kids, poor kids; State takes out a loan; and Treasury trouble


Louisiana should not wait on Medicaid expansion

With the coming change in administrations, Louisiana has an historic opportunity to extend health coverage to as many as 275,000 uninsured, low-income adults. After years of delay, Louisiana should not wait any longer to join the 30 states that have expanded Medicaid to take advantage of new federal dollars.  A new commentary by LBP’s Steve Spires notes that expanding coverage will improve Louisiana’s health outcomes while saving much-needed money in the state budget.


Despite critics’ claims that Medicaid expansion is unaffordable, evidence from other states shows the opposite. States that expanded Medicaid are saving millions by reducing spending on inefficient charity care programs as the uninsured gain health coverage, and consolidating outdated parts of the Medicaid program to take advantage of new federal funds. Louisiana could realize similar savings. While some have suggested that Louisiana should only expand coverage through a “demonstration waiver” from the federal government, such waivers take months to negotiate and often drive up costs for the state. This is time and money that Louisiana can’t spare, as the federal government will pay the full cost of Medicaid expansion only through the end of 2016.  


Read the full commentary at or by clicking here.


Rich kids, poor kids
Poor children start school a full year behind their wealthier peers in terms of educational development. The statistic is even more shocking considering it refers to kids who are 4- and 5-years old. According to Columbia University’s Jane Waldfogel, the “achievement gap” is much higher in the United States than in other developed countries. And despite the popular tendency to blame schools for the problem, Waldfogel tells the Washington Post’s Roberto Ferdman that a growing body of research suggests that most of the difference between rich and poor children appear in the first five years of life, before they arrive at kindergarten:


“The big surprise for us was to find that more than half of the inequality was already there at school entry. The schools are not as much to blame as we had expected. And that’s not true elsewhere. The United States really stands out, not just in having more inequality at school, but having more inequality even in early childhood. So something is happening in the very early years of life that’s pulling kids apart, and that’s happening more so in the United States than in other countries…


Now, one of the forces that can counteract that is a universal experience that is equalizing. And that’s why preschool can play such an important role. It’s a place where the United States differs dramatically from other countries, because virtually all of our advanced, industrialized peers have universal preschool. Whatever age their children start school, 90-something percent are in free public preschool the year before school entry and the year before that…We’re so far from that. Right now, just under 30 percent of four year-olds have access to something that looks like universal, publicly funded preschool. The percentage for three year-olds is minuscule.”


Louisiana has a framework in place to expand access to high-quality early childhood education–Act 3 of the 2012 session. But to date, the state has failed to invest the money needed to fully implement it. If Waldfogel is right, Louisiana is missing out on a big opportunity.


State takes out a loan
For the first time in more than 30 years–since the fiscal crisis of the oil bust years in the 1980s–the state is taking out a short-term loan to deal with cash flow issues. The loan is for capital outlay expenses–not day-to-day operating expenses–but is still a troubling indicator of the state’s dire financial situation. Mark Ballard with the Advocate has the details:


“We’re getting low on cash,” State Treasurer John N. Kennedy told the Joint Legislative Committee on the Budget Thursday afternoon. He asked to pursue a bond sale to raise $254.9 million for paying everyday bills on construction projects. The plan is to borrow the money for six to nine months. The state then would return to usual procedure and take out a larger loan that would be repaid over a much longer period. The State Bond Commission approved the maneuver Thursday morning and legislators did so in the afternoon…Kennedy said the way the state is burning through money to pay for new buildings, bridges, parks, renovations and other capital projects at a clip of about $45 million per month. At that rate, the escrow account used to pay ongoing bills for “capital outlay” projects will run out in March or April, he said…Kennedy said this maneuver was last used in 1987 when the state’s operating budget — which pays salaries and other day-to-day governmental expenses — didn’t have enough revenues to pay the bills.


Treasury trouble
A recent report from the Legislative Auditor includes the finding that the Louisiana Treasury Department invested more education trust fund money in the stock market than the state Constitution allows, an claim the department doesn’t dispute. Disturbingly, the Treasury explains its action by saying it aimed to “maximize dividends on investments,” according to the Auditor. Of course, the drive to increase investment returns is understandable given the state’s dismal fiscal situation, but unacceptable given the Constitution’s restrictions.


Number of the Day


275,000 – Number of uninsured, low-income Louisianans who could gain health coverage if Louisiana expands Medicaid (Source: Census Bureau)