Real health reform more than shedding charity hospitals

Perhaps its members have been reading this space regularly, or maybe they actually derived it independently, but Louisiana’s Commission on Streamlining Government looks set to recommend that there be a radical overhaul of indigent health care delivery that will encourage and challenge both the Gov. Bobby Jindal Administration and the Pres. Barack Obama Administration. But whether it’s enough to constitute true reform is another matter.

At the end of last year Jindal said plans were being made to fundamentally remake the indigent care system by removing government from the provider of care to managing that provision. Testimony in front of the committee reaffirmed that directional change, which would broaden Medicaid eligibility to families at 130 percent of poverty, essentially insuring everybody who wished to be in the state, and giving them their choice of what hospital to attend. It is believed that market forces then would push existing charity hospitals out of business.

Apparently unmentioned, however, was the exact funding mechanism of the insurance provision. The testimony sounded like it was a simple expansion of Medicaid coverage. If so, this is a mistake and represents backing away from the idea of instead of employing the current fee-for-service arrangement rather that funds dedicated to indigent care be given as vouchers to eligible recipients that then may be used to purchase health care insurance in the open market (similar to Republican plans at the national level). The present arrangement is what contributes to the leakage of money from it, so nothing would be done to improve efficiency by only an expansion. Further, because government sets Medicaid reimbursement rates but cannot compel providers to accept them, there’s no guarantee there would be enough quality provision, whereas insurers can negotiate better rates (because of their greater efficiency) with providers to ensure enough of it.

It’s possible that the greater privatization part quietly has been dropped as a bow to national politics where Democrats seem determined to ram through legislation that does not reform but merely expands in coverage and in costs the present inefficient system with increased regulation. Such a structuring makes it almost impossible for the federal government to deny the state the request essentially to fund the expansion, since it so closely tracks the goals of Democrats.

While this may look politically good for Jindal – provision of more of a good by government to more people without any extra direct cost to the Louisiana taxpayer – it is not true reform and is not a real solution to spiraling costs paid by government and thereby must be avoided like the plague. However, given the current hostile climate in Washington to genuine health care reform, whether the Obama Administration would fund what would be changeover costs (because much would be saved within a few years) to a plan ideologically opposed to his in a tough state budget environment is another matter.

Regardless, either would threaten the existing charity system which brings other challenges to Jindal. Political opponents who invest political careers, power, and privilege in the billion-dollar system will fight anything that threatens these. Also, Jindal himself has backed the building of a large new charity hospital in New Orleans that, while more realistic in size than its initial conceptualization prior to his taking office, still is too big for its intended purpose. And if it becomes primarily a teaching hospital rather than having its main mission as providing care as a result of this new direction, it becomes more outsized than ever and provides better argumentation for the opposing replacement plan to Jindal’s, rebuilding the existing facility damaged by Hurricane Katrina in 2005 – something duly noted here and by the Commission.

Of course, the Commission must approve of this recommendation followed by the Legislature, so there’s a long ways to go. Still, since a budget crisis is upon the state, Jindal never will have a better opportunity to make fundamental, not just marginal, reform. He needs to go for the homer – his original idea of vouchers – rather than let it get washed away by Democrats whose power far exceeds their legitimacy within the public at present. As doctors are instructed, first do no harm, and to make bigger the existing system without real reform will do more harm than by doing nothing at all.