State's increased cost figures for reform plan dubious

Perhaps the best argument used by opponents of indigent health care reform in Louisiana is that it would cost more money than with the present system. Of course, the argument conveniently ignores that the present cost level helps to produce the worst health outcomes in the nation, and that because reform would make for a more efficient system, that in time better care for less money per patient would result. But it is logical that in the short run, with two systems operating beside each other as the old money-given-to-the-institution system fades away the new money-follows-the-person system will grow, that costs would be higher.

But the revelation of some numbers dealing with indigent care pokes holes in this large increased-cost assertion, even in the short-run – something which the federal government, eager to see the change, has said all along while it’s been the state and the state only that has claimed costs would be quite a bit higher.

Statistics show that money spent on the charity hospital system, some units of which also feature some advanced medical training hard to replicate outside of the public sector, totals $912 million. In addition, $1.1 billion is spent on reimbursements to private institutions dealing with the indigent and those on Medicaid. In other words, over $2 billion is spent mostly on the indigent, with some of it going to medical education and Medicaid reimbursements to institutions. Another $361 million goes to reimbursement of private physicians for Medicaid patients.

In other words, the state spends about $2.4 billion on the indigent and poor (most people on Medicaid would be uninsured without it, essentially making them part of the indigent care system) with some of that used for medical education. It says the indigent portion of that is $935 million, but reform plans it says would cost over twice that.

Reviewing these numbers, the state’s figure doesn’t make sense. Is it arguing that the reform is so expensive that it essentially would double the state’s costs in this area? Then why are other states, some whose relative wealths are similar to Louisiana’s, moving in that direction and no other state maintains a charity system if it’s supposed to work so well? More importantly, does this imply that Louisiana is underfunding care for the poor and indigent by 30 percent presently?

The federal government has conjectured that the real initial extra cost of the system may be as little as $100 million a year. Given that it is hard to believe that a charity system is half the cost of a reformed system where the indigent would be given vouchers to purchase their own health care (then why isn’t every other state doing it?) and that the bulk of $2 billion a year already covers the indigent (which sounds like the state’s estimate, which it never has publicly released the method by which it was calculated, simply is taking most of what is spent on reimbursements to private institutions and saying that is the extra billion), that the federal government’s increased cost projection seems much closer to the truth than the state’s.