July 14, 2012
Almost out of the blue, a decision by Congress to cut Louisiana’s federal subsidy for health care for the poor has prompted — as it should — outcries about the potential cuts that will be required for hospitals and other health care providers.
But the cut, $859 million or about 11 percent of the Medicaid budget for the fiscal year that began Sunday, is also notable for how terribly unfair it is to the people of Louisiana.
The original problem with Louisiana’s Medicaid subsidy was not overspending by the state, but acts of God — hurricanes Katrina and Rita in 2005, and Gustav and Ike in 2008.
The percentage by which states get reimbursed for Medicaid costs depends on the state’s level of personal income. Rich states such as Connecticut get 50 percent, the floor for reimbursement. Poorer states, such as Louisiana, get a larger percentage reimbursement.
But the influx of insurance payments and rebuilding assistance since the catastrophic hurricanes has artificially inflated Louisiana’s income statistics.
Louisiana officials of all parties said — and federal officials did not disagree — that the formula needed to be adjusted because of the distortions caused by hurricane money. Officials said action by Congress, though, was required to deal with this formula glitch.
U.S. Sen. Mary Landrieu, D-La., added to the federal health care law provisions to buffer Louisiana from a Medicaid rate drop because of the influx of rebuilding dollars. Those dollars went up because of a math issue from the inclusion of the 2008 Hurricane Gustav disaster impact.
To take back the difference, House Republicans — in the fine print of the new highway bill — dropped the Medicaid match difference. The problem is that this exercise in after-the-fact economy came after the state had passed its fiscal 2013 budget based on the earlier number.
Cuts will ensue, and with precious little in the way of warning or any orderly process — even if congressional critics had a point about the impact of Gustav aid on the formula.
Louisiana by its natural position on the coast occasionally is going to be prey to hurricanes, although God forbid never again to the dimensions of 2005. But the state’s people are not richer after receiving insurance payments and Katrina aid. To reduce Medicaid payments to one of the poorer states, on the basis of flaws in the federal disbursement formula, is not fair or humane to those whose medical care might be interrupted.