WASHINGTON – During his nearly nine-hour floor speech opposing passage of the Republicans’ One Big Beautiful Bill Act, House Minority Leader Hakeem Jefferies used Louisiana to underscore his argument that the measure harms Medicaid.
The legislation, signed into law Friday, includes tax breaks and increased funding for Republican priorities. It pays for them, partially, by cutting spending by $1.1 trillion over the next 10 years for Medicaid and the Affordable Care Act.
That will lead to 17 million Americans losing healthcare coverage, according to the Congressional Budget Office.
“Louisiana is a state that stands to suffer mightily as a result of this all-out assault on Medicaid,” said Jefferies, D-Brooklyn. He pointed out that the Republican supermajority in the Louisiana Legislature passed a resolution asking Congress not to slash Medicaid because the state, one of the poorest in the nation, simply couldn’t afford the extra costs.
Except for New Mexico, Louisiana has the nation’s highest percentage of residents — one third — on Medicaid, which covers the cost of healthcare for low-income adults, children and seniors. The law eventually could cost Louisiana $4 billion and lead to 267,550 losing their coverage over the next 10 years, according to the Kaiser Family Foundation and other nonpartisan experts.
However, in the frenzy of negotiations other the past few weeks, some of the biggest cuts were delayed for several years.
That includes some of the changes that most alarmed Louisiana health care leaders, such as new restrictions on provider taxes and state-directed payments.
Louisiana’s hospital community, while not exuberant, says the bill could have been much worse had the Louisiana congressional delegation not inserted wording that delayed the changes, said Paul A. Salles, president and CEO of the Baton Rouge-based Louisiana Hospital Association.
State Senate President Cameron Henry, R-Metairie, put it more succinctly in a post on X: “The Senate-passed reconciliation bill is much improved, and Louisiana is in good shape.”
Henry had said a previous version of the bill could have caused a big enough budget problem for Louisiana that the Legislature would need to convene for a special session.
With some of the biggest changes still years out, some in Louisiana health care circles hope changes can be made to blunt the impact of the cuts. Many of those changes won’t take effect until after mid-term elections next year, when the makeup of Congress could change significantly.
How Medicaid could change in Louisiana
Of the $16.4 billion annual Medicaid costs for Louisiana, state taxpayers kick in about $3 billion, according to the Legislature. The new law would halt some of the tools Louisiana uses to pay that $3 billion, requiring the state to pour in extra money or let some people go without health insurance.
Republicans cast the changes as needed to shore up the healthcare programs by ensuring services remain available only for those truly in need.
“A lot of the estimations are far overblown … especially in my district,” said House Speaker Mike Johnson, R-Benton. About 40% of his constituents are Medicaid eligible.
But U.S. Rep. Troy Carter, D-New Orleans, said the bill “represents the largest cuts to health care and nutrition assistance in American history. …It strips support from our hospitals and nursing homes,” threatening to close long-term facilities and rural hospitals. About 38% of Carter’s constituents are Medicaid eligible.
Much of the savings in the new law come from fees the state levies on hospitals, clinics and other healthcare providers. These provider taxes help the state put more money into Medicaid.
Provider taxes also have the effect of increasing the portion the federal government must pay. The new law ratchets down the provider tax rate from 6% to 4.5% over several years. But Louisiana’s rate is 4.6%, so the state has a buffer.
Some of the money raised through provider taxes goes directly to hospitals in what are called state directed payments. One state directed payment sends funds to rural hospitals whose patients – almost half in some parishes – have Medicaid, which doesn’t always cover the cost of services provided.
The new law immediately freezes the size of state directed payments and, starting in 2028, lowers that amount by 10% each year.
The provider tax also is used to boost Medicaid payments to nursing home facilities used by seniors who need long-term nursing care but have run out of insurance and savings, which is about 60% of them in Louisiana. The bill will effectively lower payments to nursing facilities and could cause many to limit patients or close their doors.
State directed programs using provider taxes, such as those for rural hospitals and nursing homes, must be approved by U.S. Centers for Medicare & Medicaid Services, called CMS.
Wording inserted by U.S. Sen. Bill Cassidy, R-Baton Rouge, allows CMS to consider Louisiana’s state directed payment applications already in the pipeline.
“It’s a small change with huge consequences,” Cassidy wrote in a memo to state officials.
As part of the deal to persuade senators to accept restrictions on provider taxes and state directed payments, the Senate created a $50 billion fund to help rural hospitals.
Louisiana hospital officials say the fund will help but the amount is insufficient. But delaying until 2028 allows time for the provisions to be amended.
Work requirements
One of the biggest changes is a requirement that most adults under the age of 65 years work, volunteer or go to school at least 80 hours a month. The states will have to verify eligibility twice a year rather than every 12 months beginning in 2027.
KFF Health, a respected San Francisco-based nonpartisan health care thinktank, says relatively few people who receive Medicaid are able to work but choose not to.
KFF found that 69% of Louisiana Medicaid population is working and most of the 31% who are not working are disabled, elderly, or provide care for a sickened family member or are covered under the exemptions included in the law.
The issue with the work requirement, said U.S. Rep. Cleo Fields, is the amount of paperwork and effort required to remain qualified. States that have tried work requirements ended up forcing qualified recipients off Medicaid rolls.
“It sounds good,” said Fields, D-Baton Rouge. But the data shows more people lose their qualifications from being unable to quickly track down the appropriate supporting documents, such as proof of previous jobs.
The Louisiana Department of Health, which will handle the increased vetting, did not respond to inquiries. But LDH officials told hospital and congressional representatives that a more technologically advanced system is being put in place to handle the qualification process more efficiently and will be ready by 2027, when those requirements go into effect
The new law also will charge a small co-pay to some enrollees, particularly those in families of four with incomes between $32,000 to $44,000 annually, for most provider visits except for primary care and some other services.
People who buy private insurance using federal subsidies under the Affordable Care Act will have to sign up during a narrower window from November 1 to December 15.
“For the first two years, we’ll be fine, but at some point that third year is going to come,” Fields said. About 37% of his constituents are Medicaid eligible.
“It doesn’t negate the fact that soon people who use Medicaid are going to lose their healthcare benefits and many of the hospitals, particularly rural hospitals, will close,” he added.