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31.1.07

LA needs to take advantage of federal health care generosity

What more does U.S. Sec. of Health and Human Services Mike Leavitt have to do to get Louisiana to do the right thing? For months, the federal government has been working on getting the state to scrap its inefficient, low-outcome charity hospital system of indigent health care (which no other state does, and since their health outcome indicators almost all are better, should tell us something) in favor of a money-follows-the-person regime of subsidized insurance that allows patients choice and flexibility in care, rather than in directing money to institutions

It’s a plan that is working everywhere else that it’s been tried, and makes perfect sense: people in the marketplace will spend their health care dollars much more efficiently than institutions billing the state. But because of vested interests in the old system, primarily institutions, this simple, clear, and workable idea continues to meet resistance.

The previous objection had been that costs would go up for the state under this plan. They would temporarily, because of the increase in quality of health care delivery while still maintaining the cumbersome charity system. But as the transition period moved along, as people shifted into the new system with its greater efficiency, in the long run costs would go down with better outcomes comparable to the charity system.

Leavitt now has promised the state that the federal government will pick up initially 40 percent of the estimated additional costs. Still, that would leave Louisiana on the hook for $300 million in the first year. That has led shills for the institutions such as state Sen. Joe McPherson (owner of health care institutions) to disparage the plan. Worse, among others McPherson plans during the upcoming legislative session to try to get legislation passed that would more securely lock in the existing wasteful, underperforming system.

If Gov. Kathleen Blanco is smart, she will recognize the long-term benefits of systemic change and the generous offer of the federal government to ease the transition. To that end, Blanco could take a good chunk of the predicted revenue surplus of the state for this fiscal year, say $1 billion (most of it), and get the Legislature to create a fund to that would be used to supplement this Medicaid plan Leavitt has offered. This is possible because Leavitt can waive requirements to allow the state to pursue the new plan with extra federal dollars.

Chances are that the state fund would sustain the program as the transition occurred until first there was no need for it as a supplement, and then no need for a federal supplement. The federal government would be pleased to see the state wants to help itself get out of the mess it created and therefore may be quite willing to subsidize the program beyond its entitled federal dollars for several years as a result.

This is an opportunity the state cannot afford to miss. And if the state does pass on it, Leavitt needs to yank any additional funds the state could have gotten. After all, there’s no sense in throwing good money after bad, especially since its taxpayers’ dollars. Meaning once again Louisiana will have missed a chance to put people ahead of politics.

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