Gov. Kathleen Blanco set the state on an unwise collision course with the federal government regarding the new Big Charity hospital in New Orleans. Let’s hope it’s a decision that doesn’t cost the state hundreds of millions of dollars in wasted spending.
Over the weekend, Blanco’s allies in the Louisiana Legislature confirmed that the state was going to forgo federal money, at least about $225 million, to build the new facility, because it would involve too much “red tape” – created by the state’s own intransigence. The bureaucracy involved came as a result of the federal government’s questioning the scope of the planned new facility whose price tag has doubled within the past year.
In large part that happened because of different concepts in how the provision of indigent care was to occur. All parties want the new Medical Center of Louisiana – New Orleans facility to provide medical education capacity and specialized health care services. But others want to go beyond that just that, all relating to their different views on how indigent health care should be delivered in the state.
Every other state in the union follows a strategy of money-follows-the-person for indigent health care, but Louisiana insists on a money-goes-to-the-institution strategy which limits patient choice, reduces quality of care, and costs more. Even so, many political elites and special interests in the state want the latter because it brings more money into state government, increases the number of people on the state payroll, and gives them more power and privilege as a result – much more than they care about efficiency and outcomes.
Blanco’s team suggested building a large facility because it has no intention to switching to a more efficient system with improved outcomes – and even conjured a study assuming the state stuck with the existing system to try to justify the decision. If the switch was made, the hundred or more extra beds under Blanco’s plan would become superfluous – as suggested by the federal government last week in its note announcing postponement in turning over the money the state has qualified for purposes such as this.
So Blanco read the writing on the wall – reform or the money wasn’t forthcoming – and stubbornly gave up the money. This became politically possible when Blanco ally Sen. Mary Landrieu extracted a promise from Democrats in Washington that the federal government would commit substantial aid to Blanco’s mishandled Road Home Program if the state coughed up $1 billion towards the potential $5 billion shortfall. Having cobbled together over $600 million of federal money that technically had become state funds, and a small amount of genuine state funds, Blanco realized the $225 million for the hospital could be used for this purpose as well.
This still left money short for the complex, so now the state will borrow it in future years. In essence, the state would have had to come up with the $225 million one way or another for the Road Home bailout anyway so now the only extra cost to the state will be on interest for the borrowed money (which the state could not have done for the bailout because borrowing can be done only for capital outlay). It’s a politically neat solution.
Except that, first of all, the extra beds are wasteful, either because they can be done without under an efficient new system, or because they will prop up the existing inefficient system. Second, the state’s act of defiance will not go unnoticed in another part of the government which still can cost the state plenty. All along, the assumption has been the new facility will be built next to a new Veterans Administration hospital which would share some facilities, saving both money. But the federal government has been making noises that this arrangement may no longer suit it, and the state’s decision here well may solidify a decision to go separate ways, jacking up costs to the state even more.
However, one hope remains. The Legislature classified the borrowing as future, meaning it can be altered in future capital outlay budgets and the whole amount, now believed to be $1.5 billion, is not yet in the budget. This means the next administration will have the final say – and you can bet a Gov. Bobby Jindal is not going to go along with this plan. So, just as political tides and fortunes put the wrong people in the wrong place at the wrong time to create this boondoggle, they may reverse to alter eventually the big mistake Blanco and her cronies are making on this issue – to the delight of the indigent and taxpayers statewide.
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