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Jeff Crouere and Stephen Sabludowsky discussed this issue today

Am I insured when Obamacare dies? 

Mary Landrieu, Jindal health debate: bully vs. nerd

Written by  // Thursday, 28 February 2013 12:17 //

landrieu-blueThe remarks were as much about Sen. Mary Landrieu trying to save her job as it was her being a knight in the service of evisceration.

 


Louisiana’s only Democrat officeholder elected statewide accused Republican Gov. Bobby Jindal of deciding not to commit the state to expansion of Medicaid, the cornerstone of the Patient Protection and Critical Care Act (“Obamacare”) for which Landrieu cast the decisive vote, because it would detract from his credentials to win a putative GOP nomination for president in 2016. A majority of Republican governors have like Jindal refused to go along with this or have remained noncommittal.

And for good reason, for the medical economics of the situation continue to demonstrate in general this was a lose-lose proposition for the state – it would result in poorer outcomes with the state picking up proportionately more of the tab. This is because those who would qualify already with private insurance would bail out of that for cheaper Medicaid, Louisiana would have to pay for administrative expenses to increase program capacity, and in a few years will have to pick up 10 percent of the tab with the possibility that proportion will increase over time.

But Landrieu either is ignorant of reality or disingenuous on this issue, trying to make her argument that the state ought to accept expansion on the basis of a report by the liberal advocacy group Families USA that as many as 422,000 recipients could be added to the rolls, which would have the impact of adding 15,600 jobs with a claimed economic impact of $1.8 billion annually by the time it was rolled out completely. Although she didn’t mention it, she probably also based her argument on information asserted by a related leftist group closer to home that is her close ally, the Louisiana Budget Project, that claimed the state really wouldn’t lose any money on the expansion.

But when investigating the assumptions and methodologies of these efforts, it turns out they aren’t worth the electrons on which they were distributed. The Families USA report ignores completely the displacement effect that sucking so much money out of the economy would have on job creation. In national terms – not limited to one state or to the health care industry – the impact is unambiguous: it ends up as a net job loser. This is because additional spending to cover its expenses (which seemingly every day goes up for Obamacare compared to not having enacted it) will sap jobs and for the concomitant rise in private market premiums, because of cost-shifting by providers to these policy-holders.

This reveals the dirty secret about Medicaid – because it pays a lower reimbursement rate, not often do providers make enough to pay for costs. Thus, they shift them to the private market, where it’s estimated that already the typical family pays an extra $1,800 in health insurance costs to offset – set to go from 55 to 85 percent higher with the implementation of Obamacare. This is a job killer unaccounted for in the study.

Which may be exacerbated in Louisiana, because the state utilizes Medicaid dollars more efficiently than most at present. But that’s because of the nature of its enrolled population – mostly children and the healthier. So, adding to that population would enroll more higher-cost clients, meaning the state disproportionately pays more as the majority of enrollees will be using the fee-for-service model, and even those in the managed capitation plan will force the state to pay higher rates to the managed care companies overseeing them. Again, by sucking these dollars out of taxpayers’ pockets, this costs jobs. And, of course, the report gives no consideration to the damper on the economy caused by transferring all of that wealth into providing health care for many who can pay for it, higher rates for those who cannot get into the program, greater expenditures due to the poorer health outcomes of those who shift to Medicaid provision as a result of the expansion, and the higher average cost of the new entrants.

In Louisiana’s case specifically, it’s hard to determine whether all alleged 15,600 jobs and economic boost would be compensated negatively and then some by the extraction of resources from the private sector to the public sector expansion would foist and its spillover effects. But one thing is certain – taxpayers will see a higher bill, despite the efforts of the LBP report to persuade otherwise.

It tries to argue any additional costs to the state will about be offset by savings from a reduction in uncompensated care paid out of Disproportionate Share Hospital funds. Off the bat, it underestimates average costs in years more than a decade out, because it factors in the first three years of 100 percent federal payment than then drops to 90 percent (and with no guarantee it won’t go lower). Its simplistic analysis also ignores the higher relative cost per enrollee noted above, and that the low-balling of provider reimbursement rates necessary to pretend the program will cost less than it does will trigger supply reductions in providers that will send many flooding back into uncompensated care situations – meaning DSH payments are unlikely to be cut back as much as intended.

But it’s on the alleged savings on uncompensated care where the report takes the greatest flight of fantasy. It bases what came be saved on the old FFS model from which the state rapidly is transitioning out, performed to a large degree by an inefficient charity hospital system that mostly will be managed by the private sector in the future. Because this new system will be run more efficiently, less savings can be realized by a reduction in utilization (which, again, will be not be as much as the report assumes because of the supply squeeze). So rather than a gap of perhaps between $100 million and $200 million annually the state would have to pay with expansion (which the report argues can be wiped away by other assumed but unquantified savings), it will be significantly larger.

It’s the flawed conceptualizations of these half-baked efforts on which Landrieu anchors her baseless critique of Jindal, but of greater interest is why and why now. It’s a bit of payback for Jindal’s telling Landrieu’s master Pres. Barack Obama that slowing down Obamacare implementation could save the federal government money and avoid automatic spending cuts cues up in the next couple of days, but it’s about much more than that, concerning both Jindal’s and Landrieu’s future.

Jindal’s presumed pursuit of the presidency, as it is for any quality Republican candidate, is something Democrats wish to obstruct, and it’s never too early to start on that for the party of no compromise, no negotiation. But Landrieu isn’t out there just to play the faithful party hack role. The issue itself, implementation of Obamacare, in Louisiana has become closely associated with her because of that crucial vote she cast. It is the albatross around her neck situated with a constituency that regards the entire package as deeply unloved that makes the most optimistic judgment of her reelection chances as a toss-up.

So by trying to distort and obfuscate the deleterious facts about this part of Obamacare in her setting up Jindal as a foil, she attempts to provide a defense for her vote and play to lesser disapproval among the public about getting for three years a lot of “free” money (state cost-sharing begins after that, while paying for additional administration starts immediately, facts almost entirely unknown in the public). This is why she scrambles to find any scrap to justify her position, and acts like a bully against the nerdy kid with personal attacks: because she’s fighting for her political life.

As in cases of bullying, it’s a strategy to try to demean others to make yourself look better. And, as in cases of bullying, it never works over the long run, makes it more obvious that she has no reasoned argument, and serves to make her look smaller.

 

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Jeffrey Sadow

Jeffrey Sadow is an associate professor of political science at Louisiana State University in Shreveport.   He writes a daily conservative blog called Between The Lines

Website: jeffsadow.blogspot.com/
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