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LA indigent health care reform takes good first steps

Finally, the Gov. Bobby Jindal administration has issued its plan for reform of indigent health care in the state, which we then learned the changes hold great promise and look to annoy some special interests.

Essentially, the plan argues that money is being spent inefficiently that concurrently produces lower health care outcomes regarding the poor and indigent. This stems partly from procedural issues – making a variety of services “free” (since the procedures are performed and the state billed or it directly provides with no cost to the recipient) encourages wasteful usage – and from legal/bureaucratic constraints (since the state relies so heavily on state-run care through its charity hospitals it must depend proportionally far more heavily on a federal program designed not for preventive and ordinary care so patients are steered to more costly care).

The practical impact looms considerably. The administration of the present regime has costs rising far faster than the system can sustain in the long run, threatening to double its proportion of existing state general revenues in the 2004-2011 period from about 10 to 20 percent. Any attempt to rein in this spending under existing rules could threaten to make the system totally state run, if to make up the growing deficit reimbursement rates to the private providers, already low enough to discourage many from participating, get reduced further.

The plan proposes largely to remove the state from direct care and claims administration. Instead of concentrating on providing or paying providers with little control over consumption, the state wants to negotiate with networks that put together elements of health care any pay, in essence, the insurance premiums for each qualifying eligible recipient. It then would be up to the network to manage the care in a way that minimizes costs while adhering to mandated standards of quality; the better job it does, the more profit it can make (some of which will be required to be passed down to the actual providers).

In all, it creates a fundamental shift in the way indigent health care is provided in the state, one following in concept other states whose programs are judged to be successful. As a result, some interests vested in aspects of the current system are not too keen on this transformative change.

One is some lawmakers themselves. When the 2007 enabling legislation was passed, some probably intended that the legislation mainly assist the existing charity system run by the Louisiana State University System which would allow them to brag to constituents how they provided free health care to them. The “medical home” concept they figured would be created within the charity system, each component serving as a “home.” Jindal’s plan scrambles that arrangement by defining a “home” as members of a network put together not by providers, but by health care managers. By doing this, not only did the advantage the charity system’s parts and other hospital groups have disappear (by already having many functions put together), especially the charity hospitals’ bureaucratic natures may prove to be a disadvantage in what has become a far more market-driven process than many probably envisioned.

This is why some cautious words about the reforms are being issued by the LSU System (whose head of these operations is none other than the former Secretary of Health and Hospitals Dr. Fred Cerise who shaped the 2007 legislation) because it knows private sector outfits will eat into its revenues derived from providing indigent care. But more alarming to it is this new system potentially will transfer much money out of it. Already one aspect of the plan, to change the nature of W.O. Moss Regional Hospital in Lake Charles, does remove money that would have gone to LSU, and that could grow considerably. Like any government bureaucracy, LSU always prefers more than fewer resources so expect some resistance from it.

And then there are some opponents who just do not like the idea of less government and more free enterprise in indigent health care provision, even though it represents best practices, for ideological reasons, and others such as some physicians because it will make them have to pay more attention to their own business dealings. But the fact is, as long as the state is vigilant in quality control, the best way of increasing system efficiency is to bring more market elements into it.

The Jindal reforms at present speak to increased coverage at reduced costs. Whether the former can be had with the latter remains an open question, and specific details still need working out that potentially could blunt its philosophy (such as those imposed by a new Democrat administration in Washington that is hostile to the liberty provided by free markets). Regardless, this is a welcome, refresh, and absolutely vital step addressing one of the more arcane yet most significant area of Louisiana’s budget and its quality of life.

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