Jindal policy begs his reassessment of new Big Charity

Yet another reason has emerged to reevaluate again the size of the new Medical Center of Louisiana – New Orleans, or “Big Charity.” Scheduled for completion in 2015 but with no building of it having begun, just site preparation, there’s still time to take into account the changing policy landscape that reinforces the need to scale back on the facility.

After the hurricane disasters of 2005 damaged the aging former facility, then Gov. Kathleen Blanco came up with a grandiose replacement version firmly wedded to the idea that Louisiana should stay in the business of direct health care provision to the indigent. Even though the actual needs of the state as far as medical training and usage suggested that the old structure could be rehabilitated for much less than a price tag well over $1 billion, Blanco started forging ahead.

When Gov. Bobby Jindal came on the scene, after review wisely he scaled back the size, but still kept a facility larger than what the demographics suggested despite that his policy direction argued for a smaller facility still. The original Blanco plan was to increase the non-state-paid use of it (unrealistically in an over-bedded market) and Jindal throughout his terms has worked to increase private provision.

Now another Jindal policy decision will affect the actual demand for health care paid for by the state on behalf of the indigent. Deservedly he opted the state out of mandated by without penalty increases in Medicaid coverage, but as it turns out the final version his administration accepted to build Big Charity was based upon the higher state-paid volumes coming from accepting the increased coverage. Because it was too large, already the state was on the hook for as much as over $100 million annually in subsidization, and it’s possible this may rise with a smaller amount of demand probably made on its facilities.

This strengthens the utility of an alternative plan put forward by current officeholders Sen. David Vitter and Treas. John Kennedy, which would provide for more beds (but more geographically spread out) for about 70 percent of the cost. Even some adjustments to that, such as a new but smaller Big Charity, could keep as many or more beds than the 454 currently envisioned among all facilities and at a lower cost that reduces dramatically the subsidization.

While it’s possible that there may be no negative impact of fewer Medicaid patients, because some people will continue uninsured and may visit a state hospital and because others will become privately insured which reimburses at a higher rate and also opt for the new Big Charity, the unknown future effects argue for cautious assumptions. An extra $100 million a year in subsidization in perpetuity adds up fast. Discretion is the better part of valor here, so Jindal should go back to the drawing board, even if this delays a projected opening by months.