Political Horizons for July 19

• By MARK BALLARD
• Published: Jul 19, 2009

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Here’s something that’ll keep you awake at night: Just like this fiscal year, state government next fiscal year won’t collect enough taxes, royalties and other revenues to pay the government’s bills.

But unlike this year, state taxpayers in 2010 also could face a health-care bill of about $1 billion that they have no choice but to pay.

“I wake up every day, and I feel like I’m staring down the barrel of a shotgun,” said Alan Levine, secretary of the state Department of Health and Hospitals.

“Every person who cares about higher education needs to sit up and take notice,” Levine said last week about the bulk of that bill, which is caused by a fight over fine-print jargon and would require Louisiana taxpayers to pick up a tab next year that federal taxpayers paid this year.

Unless the problem is fixed, the money to pay the increased health-care costs will come from higher education, roads and bridges and other government services.

The reason is a federal funding formula that Levine calls “flawed.”

Basically, here’s the problem:  If a state provides health care for its poor and uninsured — all states do — the federal government pitches in, through a program called Medicaid.

Just how much federal taxpayers help each state is adjusted each year using a complex formula — the Federal Medical Assistance Percentage — that determines what a state can afford. For Louisiana, the federal share historically hovers around 70 percent, which in 2009 is higher than all but three states. That means the federal government pays about 70 cents and state taxpayers kick in 30 cents of every dollar spent on providing health care.

Louisiana has the nation’s second-highest percentage of people living in poverty — one of every four residents uses Medicaid — and the state’s taxpayers have among the nation’s lower average salaries.

Levine rummages through a warren of charts and statistics stacked around his office as he talks about how the billions of dollars spent in Louisiana to recover from hurricanes Katrina and Rita artificially pumped up a key component of the formula: per capita personal income — which bureaucrats call PCPI.

Finding the line in the Bureau of Economic Analysis report, Levine shows how Louisiana’s PCPI plugged along through the decade at an average 6 percent annual growth, then jumped to 42 percent between 2005 and 2007 because of extra hurricane recovery dollars.

Florida, Alabama, Mississippi, Texas and even Iowa have experienced a similar anomaly after catastrophic disasters, though not to the extent Louisiana has, Levine says. He admits to a tough task ahead but hopes to amend bills in the U.S. Congress that would suspend using the formula when PCPI jumps by 5 percent or more after the president declares a disaster.

Meanwhile, federal Medicaid assistance to Louisiana drops from 72.3 percent to 67.6 percent in October, then down to 63.2 percent in October 2010. State taxpayers — me and you, whose annual incomes have not actually risen — will have to pay almost a dime more on every dollar spent for health care.