BATON ROUGE, La. — Louisiana’s Medicaid program is spending at a slower pace than expected this budget year and could leave the state with a surplus in six months if expenditures remain on their current path.
The latest forecast released this week shows the $12.5 billion government-financed health program may spend as much as $650 million less than projected for the budget year that began July 1.
Most of that amount will be unused federal spending authority — not dollars that can be allocated to other state government programs and services. But the Department of Health says about $30 million of the amount, if the trends remain on track, would be a state general fund surplus that could be spent elsewhere in state government.
The new projections are a rare development in a program with 1.6 million enrollees that traditionally grows in price tag each year, and often requires new infusions of cash midyear — or cuts — to stay in balance.
“This is good news,” said health department chief of staff Andrew Tuozzolo. “We can put to rest fears about how the program is growing out of control and we’re always over (budget).”
Much of the less-than-expected spending is in the Medicaid expansion that Gov. John Bel Edwards began last year. The program added nearly 450,000 adults, largely the working poor, to the Medicaid rolls through the federal overhaul law championed by Barack Obama.
Tuozzolo said when the Medicaid expansion program first began, it was difficult to forecast how those recipients would use the services and how much they would cost.
“It’s not an exact science as we ramped up,” he said.
The expansion boosted the Medicaid program’s costs dramatically, and Republicans have questioned if the spending is sustainable. Louisiana’s Medicaid budget is nearly half the total state operating budget and has grown from a $7.7 billion price tag five years ago.
The federal government is paying most of the Medicaid expansion cost. Louisiana is paying a share that eventually increases to 10 percent. Lawmakers also passed items to help cover the state’s costs, including a tax hike charged on health maintenance organizations. Louisiana also is saving millions by tapping into enhanced federal financing for coverage it already provided to the poor and uninsured that is now available because of Medicaid expansion.
Tuozzolo credited expansion with driving people to cheaper primary care services and providing improved access to care for people who were previously uninsured. He said the health department hopes the under-budget numbers “will give people confidence this can be run stably.”
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