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2.12.08

Jindal plan offers most possible, best health care fix

Battle lines continue to be drawn over Louisiana’s reform for its indigent care. Four separate ideas currently circulate, but only one will work both in political terms and in achievement of quality care done more efficiently. But the political side of the equation already has ruled out one alternative, and threatens this other one as well.

Essentially, the state’s fee-for-service Medicaid system that encourages providers, often government itself, to bill away with little regard for cost containment or efficiency, continues to devour more and more resources. The state faces the central problem of having to pay for nearly a third of these costs which, except for elementary and secondary education as a whole, is the single largest programmatic expenditure of the state. Reform promises to control these costs without deterioration, if not actual improvement, of service provision.

Gov. Bobby Jindal’s Secretary of Health and Hospitals Alan Levine has come up with a plan that would take the indigent and allow their placement into various insurance pools run by the private sector, which would negotiate rates with providers. It is hoped that, in the long run, this would introduce efficiencies into the system that would allow for more coverage at the same or reduced cost. Theoretically, it could allow for higher reimbursement rates than now exist to encourage more providers into the Medicaid system and to discourage essentially unnecessary expenditures that currently must be paid for either because of lack of coordination or because providers want to increase their revenues.

This is a plan similar to that Levine introduced when he served as head of Florida’s health care, and the initial returns on that are encouraging. The main problem seems to be raising awareness of the indigent about the program and their options, but despite higher per person administrative costs (because only 10 percent of the indigent population has been allowed to participate), at least for now its expenditures are running below budgeted levels (outcome changes have yet to be assessed).

But this idea has its detractors. The Louisiana State Medical Society has proposed a system where the poor are given vouchers to purchase medical care, where Jindal’s system would interpose an intermediary. While this proposal might have trouble holding costs down unless providers are fully subjected to market forces, it probably would lower administrative costs without an intermediary. However, practically speaking this would be a nonstarter in Louisiana as it completely cuts out government and too many politicians simply don’t want to do that.

Another suggestion from other sources has been to adopt a system such as in North Carolina replicated to some extent in Louisiana’s CommunityCARE program, where government tries to coordinate care itself. The problem with this model, however, is that doesn’t do a particularly good job of cost containment (as one might expect without market forces prevailing) nor makes a great deal of progress on improving outcomes (Levine concedes it might be a good model for rural areas where little private-sector competition would exist).

And out there at the federal level is the plan proposed by president-elect Barack Obama that largely could moot the entire argument. Obama would force everybody to be insured with the government either forcing employers to provide it or herding everybody into a government-run plan. The indigent would automatically be enrolled and so federal parameters could supersede any state directives.

At an out-of-session informational meeting of the House yesterday, state Rep. Herbert Dixon wondered why act now when it appeared this Obama plan was on the way. He got sidestepped a bit on the answer from Levine, who said there were consistencies between the Obama plan and Jindal’s. But there is a major difference, that where Obama’s would force everybody into a plan heavily managed by the government that would mandate reimbursements and that the non-indigent pay for the indigent premiums through government directly or indirectly (passing through employers), Jindal’s would set aside a fixed amount of dollars to be managed by the private sector that could much more easily adapt to specific conditions and use dollars more efficiently. Thus Obama’s plan, which would require a massive increase in spending, may only marginally increase coverage of the indigent while Jindal’s would do a far superior job of coverage and of introducing efficiency into the system.

However, the basic idea behind Jindal’s plan, removing government as much as possible from the enterprise, haunts Democrats and liberals like a vampire ready to suck the life out of their favorite institution, government. They want government involved as much as possible because it increases the power of elected officials and facilitates redistribution of wealth. So it is in their interests to stall as much as possible in the hopes that an Obama Administration would veto a move to remove government as much as possible from health care, just as it is in the interest of Jindal (and the state as a whole) to move quickly under the present administration that would look far more favorably on a private sector orientation to reform.

Whether that will happen is anybody’s guess, given time constraints. Obama forces formally take control of government in less than 50 days, but for weeks after his inauguration holdovers and careerists in the federal government will still be making decisions. Jindal has to get his plan to Washington as soon as possible to ensure that forces ideologically opposed to his solution won’t control the situation. Especially key to this is the present administration probably much more likely to forgo the state having to pay back the federal government for past overcharges, in order to facilitate this kind of reform. If not in time, the plan will be vetoed and for at least another year Louisiana will have to operate under the old inefficient, inferior-outcome system that will eat up more money that could have been used for other purposes with the prospect of potentially worse to come.

Given what is now possible, Jindal’s best shot at substantive reform is to try to get Levine’s ideas through. If that fails, Louisiana should prepare to hunker down to face a system that, if squeezed for funds because of budget deficits elsewhere, will expand on its history of underperformance and inefficiency.

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