It’s recently come to my attention that about 43% of us here in Louisiana are enrolled in some sort of private health insurance coverage. That’s based on my sum of all Louisianians who have insurance through a job, through a family member who has a job or through an individual policy like HealthCare.gov.
When I look at the rest of the nation, that’s a very low percentage of state residents covered through private health insurance. The national average is about 56%, and you can see we are well below that.
It’s a rare state where people insured through government healthcare programs (Medicaid, Medicare, etc.) are the majority. But Louisiana is that rarity, with government coverage pushing 50%. There are several reasons for this. They revolve around our much-lower-than-average household income and rapidly growing senior population, plus the state’s Medicaid expansion efforts.
In other words, Louisiana has a larger share of patients whose healthcare is paid for by a government agency, not a private insurance company like Louisiana Blue. Even if those government agencies contract with a private insurance company in arrangements like Medicare Advantage plans or Medicaid Managed Care Organizations (MCOs), they still reimburse doctors and hospitals at fixed, government-specified rates. And those rates are much lower than reimbursement from a private insurance company, as I’ve explained before. There is no real negotiation for healthcare providers with government payers because those prices are set each year.
To add another layer, there is ample evidence that government agencies (Medicaid more so than Medicare) pay for their covered enrollees’ care BELOW the wholesale cost of providing it.
If I Straight Talk that, it means that docs and hospitals on average LOSE MONEY when they treat a Medicaid patient, and they have to be highly efficient to come close to breaking even on a Medicare patient.
Shifting Care Costs
Hospital groups tell us that the average hospital LOST 12% of their revenue because of treating Medicare patients in 2024.1 And we know Medicaid’s up-front payments are even lower than Medicare’s. Keep in mind Medicaid and Medicare patients make up about two-thirds of the average facility’s total patients on any given day.
Think about running a business where you are forced to provide services for two-thirds of your customers while operating at a loss. How would you stay afloat? How would you keep the lights on and the doors open in that situation?
If you can’t raise prices on those two-thirds of your customers, you only have two choices:
- Cut costs WAY back on their services to try matching revenue with expenses more closely; or
- Raise prices dramatically on the other one-third of your customers and try to make up your losses.
Now, I have some bad news for you:
If you have private insurance, whether through your employer or an individual policy here in Louisiana, you and I have been subject to choice #2 for years. Those of us with private insurance coverage like Louisiana Blue are the other one-third of customers.
I don’t mean to isolate hospitals in this. The same patient base and challenge absolutely applies to any sort of care you can get—whether it’s ambulatory surgery, doctor or specialist visits, labs, imaging, physical therapy—you name it. And for those who have private insurance through an employer, then you AND your employer are making up the difference for the half of Louisianians whose government health plans are reimbursing healthcare providers below wholesale cost.
And when those healthcare providers who are seeing all these lower-reimbursement patients find they can’t meet their goals financially in a given year, Louisiana Blue and other private insurers are their first stop to try getting more money. That means YOU and YOUR WALLET are their first stop.
This shifting of costs has been going on for decades, and it’s baked into your rates. I’ve been talking about this for a long time, but the general consensus is that nobody wants to tackle it or do anything about it. I’m bringing it up now because the clarion call for more money from the providers in your Louisiana Blue network has gotten much louder and more shrill in recent days. And this lack of payments for treating patients on government health plans is often cited as the reason.
Same care. More money. Not more value.
So What’s the Path Forward?
If we are going to keep YOUR Louisiana Blue healthcare costs in line, we have an obligation to inject some reality into this process. That means pushing back against anything that adds cost to you but does not add value to your care. I believe we should be as transparent with you as possible about the demands we are receiving. It’s your money, after all.
When we do that lots of people will get angry with us, but that’s ok. We can take it. On your behalf.
In 2025, we absorbed as much of that shifted cost as possible, even putting our Plan into a loss of $177 million and reducing our workforce to try and keep that cost off of the backs of our members. Unfortunately, our costs went up faster than we could absorb, and we were still forced to raise rates quite a bit. More than we are comfortable with, but we have an obligation to you and our regulators to run a business that is sustainable. Those kinds of losses are not sustainable.
But the clarion call for more money has begun again. And we will be fighting back. And you may hear something of that fight in 2026. And I want to assure you of a few things:
- We are not negotiating hard with providers to get bigger bonuses, hire more people or enrich shareholders (we don’t even have any shareholders). We are trying to make rate increases smaller. That’s it.
- We value every single provider partner we have in our networks. They are the bread and butter of our business. But some of them bring value, and some are just looking for more money. It’s our job to make sure if YOU trust us with more money, then YOU get more value for that investment.
- In 2025, we ran our business on only 9% of the premium dollars you trusted us with, including salaries for more than 2,500 of our fellow Louisianians. More than 90% of all the money you paid into Louisiana Blue bought healthcare or prescription drugs for you and other members. Our commitment to you is that we will continue to run the leanest ship possible to get you the most value for your money. You can take that to the bank.
I can’t help but wonder, at this stage, if it isn’t time for a reckoning in government healthcare. As a state, can we continue to cover the medical costs of 1.5 million of us while paying significantly below wholesale costs for that care? Can we keep forcing medical providers to lose money by caring for the financially least among us?
Can we continue to promise our cherished, rapidly growing senior population that they will have the healthcare they need when the program that provides it demands the medical providers who support the program lose money to participate?
And, most importantly, is it right to continue to ask employers and individuals with private insurance coverage to keep paying far over the actual costs of their own healthcare to make up the difference?
The Straight Talk is, we’ve driven this horridly unequal bus long enough. It’s about time that we have some honest conversations about the shrinking private insurance market and how it can no longer pay more to support government programs that underpay for care. Asking someone else to pay for a problem they didn’t create is pure codswallop, and we certainly can’t build a business on that. So, if you see us fighting back, you’ll know that’s what it’s about. It’s about you and what you can afford.
1 Check out the appendix I’ve put together on the topic of Medicaid payments to hospitals. It’s very economics focused (hey, it’s what I do), but I hope you find the breakdown of numbers interesting.
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