Our Views: Medicaid rate hits Louisiana

• Advocate Opinion page staff
• Published: Jul 22, 2009 - Page: 8B

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If this year’s state budget crisis was fun, wait until next year.

Because of the formula used in the calculation of Medicaid support from the federal government, Louisiana might face significant new budget cuts in the 2011 fiscal year that begins next July 1. And then, in 2011, not only does Medicaid reimbursement take another dive, but the federal stimulus aid to the state also goes away — a double-whammy.

Gov. Bobby Jindal and U.S. Sen. Mary Landrieu, D-La., recently met on the problem.

We hope Landrieu and the state’s delegation in Congress can plot a way through this thicket. Because Louisiana is a relatively poor state, the federal reimbursement for Medicaid — the principal medical program for the poor — is in the range of 70 percent of the cost of the care. That rate is determined by a formula based on total personal income in the state, as calculated by the independent Bureau of Economic Analysis.

The problem? Louisiana’s income was artificially inflated by insurance payments and federal aid in the wake of the hurricanes of 2005. If the reimbursement rate is adjusted for that bogus “income,” Louisiana faces a shortfall in the hundreds of millions of dollars per year.

“The people of Louisiana have been devastated by four major storms in just over three years and they’re fighting to get back on their feet, and should not be victimized again by their own government,” Jindal said. “This formula will put severe pressure on health-care funding, higher-education funding and other key Louisiana priorities.”

Jindal’s top health aide, Alan Levine, has been to Washington to press the state’s case for relief.

We hope that the Obama administration and Congress listen, but the state’s case for assistance is clouded by political concerns. Overall, there is the problem of “Katrina fatigue,” with the state’s woes after the hurricanes receding in national consciousness.

Further, there are ballooning federal budget deficits — for which Jindal is trying to score political points by criticizing President Barack Obama. Aid to Louisiana on this front will add to the deficit; members of Congress might be reluctant to make even this one change because the nonpolitical formula should be preserved against future raids.

We don’t agree with the latter position, because of the hugely exceptional circumstances of the 2005 hurricanes, but it is an argument that is going to be heard.

Finally, the state government is going hat-in-hand to the U.S. government for more than $700 million in Medicaid funds. But this is the same state government, under Govs. Kathleen Blanco and Jindal, that has cut state income taxes by roughly the same amount. Most of those tax cuts, although not all, went to wealthier families; Congress can rightly question why the state’s poor are a federal obligation while legislators used the state’s short-term surpluses to benefit the better-off.

The latter is a particularly good argument, but we don’t believe those are compelling reasons to cut Medicaid spending in Louisiana.

The attack of hurricanes Katrina and Rita was one of America’s most extraordinary events, an act of war by Mother Nature. To allow this funding formula to cut Medicaid reimbursement is a travesty, and Jindal and the legislative delegation are right to point that out. We hope the delegation in Congress can persuade the administration and its colleagues of the unfairness of the formula adjustment.