By John Kennedy, State Treasurer

On May 30, President Obama directed Medicare to begin paying for “gender reassignment surgery,” commonly known as sex change surgery, which costs between $25,000 and $75,000 per patient depending upon the gender chosen. Medicaid will likely follow, as it usually tracks Medicare’s coverage provisions. (N.Y. Times, 5/31/14, p. A14; Wall St. Journal, 5/30/14). This additional cost is yet one more reason why Louisiana needs to fix its Medicaid Program before we can no longer afford it.
Medicare is federal health insurance for seniors and the disabled. It costs American taxpayers $486 billion a year. Medicaid, on the other hand, is a federal and state government health insurance program for the poor. The states run it but the feds put up much of the money (about 67% in Louisiana). Medicaid costs American taxpayers $415 billion a year. Louisiana taxpayers pay $8 billion a year for Medicaid, which provides free health care to 1.4 million state Medicaid enrollees and, through Medicaid’s Disproportionate Share Program, another 850,000 uninsured Louisianians.
Both Medicare and Medicaid are approaching insolvency. Think of Thelma and Louise in that car driving toward the cliff. Medicare expenditures began exceeding income annually in 2008. Similarly, federal actuaries at the Congressional Budget Office (CBO) estimate that Medicaid expenditures will grow 8.7% annually through 2020. Louisiana’s current Medicaid budget of $8 billion, up from $935 million in 1988, will cost $13 billion a year in 2020 if the CBO is correct. Since Medicaid, unlike Medicare, is paid for with General Fund revenues, increases in Medicaid spending crowd out funding for pre-K to 12 education, universities, roads, public safety, coastal restoration and economic development.
All of us want every Louisianian and every American to have access to quality health care. There’s no free lunch, however. If someone can’t afford medical treatment, government pays for it with taxpayer money. Taxpayers who are asked to pay are entitled to also ask whether their money is being spent wisely and effectively.
Medicaid as we know it is dysfunctional. According to a June 2006 report by the Public Affairs Research Council (“Action Steps for Access to Care”), Medicaid in Louisiana pays for 900,000 visits annually to emergency rooms for nonemergencies (think acne, eye examinations, insomnia and pregnancy tests); spends 43% of its programmatic dollars on only 3% of its enrollees (Louisiana Medicaid Annual Report 2012-2013); wastes money in its prescription drug program (The Advocate, 6/30/14, p. A1); and, according to a study of 6387 patients in the Oregon Medicaid expansion that was published in the New England Journal of Medicine (“The Oregon Experiment – Effects of Medicaid on Clinical Outcomes,” 5/2/13), does not lead to better health outcomes. And despite the fact that Louisiana taxpayers are spending record amounts of funds on the program, 40% of our physician are not accepting new Medicaid patients, according to the Kaiser Family Foundation (N.Y. Times, 11/28/13), in large part because provider rates are so low the physicians lose money.
America and Louisiana need to fix Medicaid.

Contact:
Michelle Millhollon
(225) 342-0012
mmillhollon@treasury.state.la.us