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Medicaid expansion expected to cost $376M more than budgeted

Medicaid expansion expected to cost $376M more than budgeted

BATON ROUGE, La. (AP) — Louisiana's Medicaid expansion program is projected to cost $376 million more than expected this year, as older and costlier uninsured patients sign up for the free coverage, according to the latest data released by the state health department.

The higher-than-expected cost will boost the estimated price tag for the program to $2.3 billion this fiscal year.

But it won't be a drain on the state's deficit-riddled budget. The Louisiana Department of Health says the shortfall will be covered entirely by federal Medicaid financing, as long as lawmakers agree to plug the federal dollars into the budget.

The data also means Louisiana's long-term costs for the Medicaid expansion could be higher than anticipated when Gov. John Bel Edwards embraced the government-financed coverage for the working poor earlier this year.

Jeff Reynolds, chief financial officer for the health department, said the latest numbers suggest the program will cost more not just this year, but also in later years. However, he said the state has financing sources that will cover the increased costs.

Reynolds noted Louisiana is saving an estimated $184 million this year by tapping into the Medicaid expansion's enhanced federal financing rates for coverage the state already had provided to the poor and uninsured. The higher federal match rate makes the care cheaper for the state.

The health department anticipates the state will save money on the Medicaid expansion for the next five years.

"I still see those savings occurring and am still very positive about where we're going," Reynolds said Thursday.

About 332,000 people are enrolled in Louisiana's Medicaid expansion program, which began coverage July 1. The Edwards administration has said nearly 30,000 of those have received preventive services that in some instances have identified cancer, diabetes and other illnesses.

Adults ages 19 to 64 with incomes up to 138 percent of the federal poverty level — about $16,400 for a single adult or $33,500 for a family of four — are eligible for the coverage through one of Louisiana's Medicaid plans administered by private managed-care companies.

The latest Medicaid expansion spending projections were included in a report sent to lawmakers this week that forecasts spending across all Medicaid programs.

The health department was pleased the report showed a slight, nearly $3 million surplus in state financing for Medicaid. But the report also showed Louisiana is expected to spend $376 million more in federal financing on payments to the managed-care companies for the expansion.

Two reasons are primarily behind the increased estimates. Louisiana is on track to enroll 402,000 people in the program for the current 2016-17 budget year, beyond its target of 375,000.

Also, the people enrolling are older than expected, and they cost the state more.

The Medicaid expansion budget had assumed 71 percent of the program's enrollees would be under the age of 40. Instead, that percentage is on track to be 53 percent, according to the health department data.

"It's us trying to predict the future, and that's just hard to do," Reynolds said.

The federal government is picking up the full cost of the Medicaid expansion through the end of 2016. After that, Louisiana will pay a share that eventually increases to 10 percent.

Reynolds said lawmakers have passed items that will help cover the state's costs without dipping into general state tax dollars. Those include a mechanism for hospitals to pool their money to help pay Louisiana's share of the expansion program and an increase to the tax charged on health organizations known as HMOs.


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