Gov. John Bel Edwards predicts he will have to call legislators into a special session next month in order to tackle the state’s mid-year revenue shortfall. Legislators and administration leaders know more cuts are on the way, but the exact size of the budget gap won’t be known until the Revenue Estimating Conference meets tomorrow. The governor says a special session would allow cuts to be spread among more entities than if he acted unilaterally. Edwards and House Speaker Taylor Barras agree that higher education should be protected as much as possible. The Advocate’s Elizabeth Crisp has the story:

(House Speaker Taylor) Barras said that he has already implemented a 10 percent cut to the House budget. He said he had not heard that other state leaders were volunteering to take deeper cuts, but he agreed with the governor that colleges and universities should be spared as much as possible after deep hits to their budgets in recent years. … Dr. Rebekah Gee, secretary of the Louisiana Department of Health, said Wednesday she’s bracing for her agency to take a hit of several millions from her agency appropriations if the REC (Revenue Estimating Conference) says the state is more than $300 million below revenue projections. “We always get hit,” Gee said. Because of restrictions on the state budget, health care and higher education are often vulnerable to cuts. “We’re putting together various budget scenarios. We have to be prepared,” Gee said. “And we’re explaining to legislators why we need more revenues.”

As the AP’s Melinda Deslatte explains, higher ed and health care are the only areas where significant cuts can happen. In order to achieve long-term budget stability and full funding for the popular TOPS scholarship program, additional revenue is needed:

Colleges, which took a $12 million cut earlier this budget year in a prior round of cuts, appear poised for another hit to help close that next deficit. But Edwards said he will propose that Louisiana raise taxes in the upcoming regular legislative session to avoid reductions to campuses in future budget years — and to fully fund the TOPS college tuition program. TOPS awards are only covering 42 percent of tuition this semester, because the program is $90 million short of what was needed to pay full tuition for all eligible students. “We have to raise additional revenue,” the governor said.

ACA repeal moves forward

The U.S. Senate voted along near unanimous party lines early this morning for a budget resolution that represents the first major step in repealing the Affordable Care Act (Republican Senator Rand Paul of Kentucky voted against the resolution). President-elect Donald Trump and House Speaker Paul Ryan are now both saying they would like to see a simultaneous (or near simultaneous) replacement of the landmark health insurance reform law after a repeal bill passes. But there are no details about what the replacement might look like. As David Dayen explains in The Nation, the myriad promises made by the president-elect and members of Congress can’t all be kept:

So now you have all these conditions on the replacement: It has to provide not simply “coverage” but better coverage to at least the same number of people as the current system with a cheaper bottom line cost. The Price plan, the model legislation, literally does the opposite. It envisions worse coverage and, because of the lower subsidies, a higher cost to the individual. You could certainly increase the federal outlay and up the subsidies and meet the Republicans’ self-described standard. But Price wants to cut federal spending on health care—particularly by making Medicaid, where half of the Obamacare coverage gains come from, into a block-grant program. There’s no way to satisfy the coverage promise if substantially fewer poor people can get on Medicaid. And Senator Alexander wants to repeal Obamacare’s “essential health benefits” and wellness provisions, further making coverage worse.

Michael Neidorff, CEO of a major health insurer, recently reiterated problems with various replacement proposals being floated. Paige Winfield Cunningham has the story for The Washington Examiner:

Neidorff also said that if Congress repeals the law’s Medicaid expansion, it ultimately would make employer-sponsored plans pricier because hospitals would deliver more uncompensated care and pass the costs along to group plans…Neidorff also criticized some of the replacement ideas suggested by House Speaker Paul Ryan. Allowing insurers to sell products across state lines would make it harder for consumers to appeal for claims by muddling which state authority they should go to, he said. And he said that using block grants for Medicaid, an idea that would result in less federal spending on the state-run program, would hurt states with a growing Medicaid population but help those with a shrinking population.

All of this is happening while people keep signing up for health coverage through the Affordable Care Act’s marketplaces. Shelby Gonzalez, a senior policy analyst at the Center on Budget and Policy Priorities has more:

While many insurers raised premiums in 2017, these increases don’t seem to have led consumers to drop coverage. Of the 11.5 million people who signed up, 8.9 million were enrolled in 2016. And 56 percent of them weren’t simply re-enrolled automatically; they returned to the marketplace, shopped, and picked a plan to suit their current needs. The vast majority (81 percent) of people who signed up will receive premium tax credits to help offset their costs. The credits are tied in part to the cost of the “benchmark” plans (the second-lowest-cost “silver” plan in a consumer’s area), so when the plans’ costs rise, so do the credits. The average monthly credit for people signing up for 2017 coverage in the 39 states using HealthCare.gov is $386.

Relying on the feds

Louisiana takes in the second most federal funding of all states, according to a new report by the conservative Tax Foundation. The Greater Baton Rouge Business Report has the story:

The state follows Mississippi—the state most heavily dependent on federal aid with 40.9% of revenue coming from the federal government—in the ranking. According to the foundation, states like Louisiana and Mississippi tend to be more heavily reliant on the federal government because they have modest tax collections and relatively large populations of low-income residents. The opposite is the case for less reliant states like North Dakota, which received only 16.8% of its revenue from the federal government.

In an address marking one year in office, Gov. John Bel Edwards touted ways his administration was maximizing federal funding. The Advocate has a full transcript of his remarks:

On my first full day in office, I signed an executive order to expand the Medicaid program in Louisiana. Since coverage began five and a half months ago, more than 370,000 working poor people of our state have health care coverage who didn’t before – all because we brought our federal tax dollars back to Louisiana to help our own citizens…Among the many transportation highlights from this past year is the $100 million in FASTLANE grant funds we received – the fourth largest award in the country. By bringing home our federal tax dollars to help our people in Louisiana, we are able to make critical infrastructure investments all across our state.

Benefits of transfer programs

Programs that provide cash transfers, food assistance, health care, and housing have substantial impacts on children’s livelihoods. A recent review of the literature by economist Kristin Butcher details the findings. Butcher summarizes these findings in a brief for The Brookings Institution:

• Cash transfers: The Earned Income Tax Credit (EITC) appears to have a direct effect on children’s health and educational outcomes. The EITC matters for children in ways that potentially translate into greater productive capacity later in these children’s lives.

• Food and nutrition programs: Children in counties that were early adopters of food stamps, the predecessor to the Supplemental Nutrition Assistance Program, compared to similar children in other counties, had higher birthweights and lower neonatal mortality, and later in life those who were exposed to food stamps from ages 0-5 had better health outcomes. The Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) also appears to have a positive effect on birth weight.

• On health care and health insurance: Medicaid eligibility early in life reduces adult mortality and disability rates, and improves economic outcomes. Providing health insurance early in children’s lives has substantial long-run benefits.

• On housing programs: There is limited evidence on the long-run impact of the primary government housing programs, but the “Moving to Opportunity” experiment, which paid for participants to move from high-poverty to lower-poverty communities, appears to have had substantial, positive long-run effects on those children who were younger than 13 at the time of the move. As adults, recipients earn more money and live in higher income households. They are more likely to go to college and they attend colleges that are higher quality.

Number of the Day

375,614 – Number of Louisianans now receiving health coverage via the Affordable Care Act’s Medicaid expansion, which Gov. John Bel Edwards accepted one year ago today. (Source: Louisiana Department of Health)