Speaker: La. debt is ‘time bomb’

• By MARSHA SHULER
• Advocate Capitol News Bureau
• Published: Dec 10, 2008 - Page: 1A - UPDATED: 12:05 a.m.

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House Speaker Jim Tucker called it “a ticking time bomb that is going to blow up on us.”

The “ticking time bomb,” said Tucker, R-Terrytown, is $770 million that the federal government claims Louisiana owes.

The debt stems from three separate financial missteps under previous administrations involving the use of federal health-care dollars.

The debts claimed by federal authorities are being used as “bargaining chips” in state and federal debate surrounding Gov. Bobby Jindal’s proposed restructuring of Louisiana’s health-care delivery system.

Jindal and his health chief Alan Levine have been negotiating with federal officials over the total.

The amount rises each day. Some of the debt carries an interest charge of 12 percent.

The federal-state dispute comes at a time when the state is already projecting a $1.3 billion budget hole for the fiscal year that begins July 1.

The federal government claims the state owes it:

• About $290 million for use of Medicaid money to help pay off “road hazard” claims through the state’s self-insurance programs — the Office of Risk Management.
• Nearly $120 million in Medicaid overpayments made for nursing home care.
• Another $360 million rooted in excess cash that went to LSU’s public hospital system for care of the uninsured.
  

Levine told lawmakers last week that his agency has $350 million in one-time money that could be used toward debt repayment.

But instead of repaying the debt, the Jindal administration wants to use the funds in-state as it launches a health-care revamp and Medicaid expansion that adopts a private insurance-based Medicaid managed care model.

The Bush administration has been pushing the state in that direction for Medicaid care of the state’s poor and uninsured for the last several years.

So far, there’s been no settlement. Neither has the state sought federal approval of its health-care revamp plan, which relies on relief from the federal debt for its initial financing.

“The political leaders in Washington want to do it. But they have to be sensitive about what they are doing — setting precedent for other states,” Levine said. “Whatever is done for us, you can rest assured that other states are going to work it.”

Levine said federal health officials have the U.S. Department of Justice, the inspector general and the General Accounting Office looking over their shoulders.