FMAP money saves LA now, but pays far more in future

Make no mistake, few in America will be better off as a result of passage of health care insurance legislation that will raise premiums and spending and simultaneously lower quality of health care. But it does ameliorate Louisiana’s budget difficulties to some degree, even if only delaying the bigger costs it will impose on state taxpayers.

The bad news that initial estimates show the 2009-10 fiscal year for the state is running at least a couple of hundred million dollars short. Since this is so close to the end of a fiscal year, catastrophic cuts would have to occur in some areas including health care. If these figures hold up, Department of Health and Hospitals Secretary Alan Levine said he could use money he was hoping to hold aside to plug another projected deficit for next year to fill in the gap temporarily.

Instead, the problem is temporarily solved. The ruinous bill expected to be signed into law today by its main instigator Democrat Pres. Barack Obama contains the so-called “Louisiana Purchase” line item that gives the state somewhere in the neighborhood of $100 to 300 million extra for Medicaid for its FMAP share because of changes in the state’s matching requirement. Disaster recovery dollars as a result of the 2005 hurricanes drove Louisiana income indicators used to compute the match higher, increasing the state’s burden. Universally, Louisiana policy-makers have cited this as an unfair artifact of the formula that does not reflect the state’s real ability to pay.

But while Levine and his boss Gov. Bobby Jindal and almost every federal official elected from the state have argued standalone legislation should address the problem, Democrat Sen. Mary Landrieu, who had professed previously skepticism about the impending law, then supported after it was revealed the provision to give extra money had been inserted into it at her behest. In all the convolutions since, it has remained and will continue even as Democrats embark upon the unprecedented, unintended, and possibly illegal use of reconciliation to change a bill already passed into law. That Landrieu has written about her support of the reconciliation process in this case indicates Democrats have enough votes to keep it in the manipulated bill they hope to disgorge within the next few weeks. And any future repeals of the provisions politically will come too late to prevent transfer of that money.

Thus, with the money essentially guaranteed and wisely not included in Jindal’s budget, Levine is free to tap into the money set aside if needed to weather this year’s potential sudden shortfall and use the Louisiana Purchase money to shore up next year. Of course, this is just a very temporary solution. In fact, Levine has noted that when the requirements of the new bad law come into full effect, it will cost the state annually about as much as the “fix” itself, so the bill will end up costing far more than any single fix – a fact Landrieu continues to ignore.

This attack on liberty and scourge to quality health care may provide temporary respite to Louisiana’s immediate fiscal problems, but, besides the forced escalation of Medicaid costs, in the long run will cause a host of more serious fiscal and non-fiscal difficulties to the state. Perhaps voters will thank Landrieu for that at the appropriate time.