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9.10.12

Approving amendment reduces protection of elderly

Perhaps the most arcane, and in monetary terms by far the most significant, amendment coming up for Louisiana voters to choose whether to ratify this fall is Amendment 1. Cursory attention to it may lead to a wrong conclusion in vote choice.


Amendment 1 would prevent the Medicaid Trust Fund for the Elderly from being “swept,” or the process used when excess money builds up in a dedicated fund that then may be used for other obligations, through a special appropriations bill. It would join a small number of the largest funds that, given the nature of their purposes, have independent and very predictable funding streams and uses to which they are put (except for the Bond Security and Redemption Fund, a pass-through vehicle for revenues that assures state debt gets paid).

This would create an outlier, for the Fund has a narrow purpose: mainly to provide a cushion to support Medicaid payments to nursing homes and for the remainder to home- and community-based services, among other things, this mix determined by department policy although the law gives nursing homes the first crack at funds from earnings. By statute, only the interest could be swept, which, given it started with a $500 million principal balance a dozen years ago, is now cushioned by less than $20 million. It has only a relatively tiny revenue stream, from the sale of specialty license plates and penalty payments by nursing homes.

Because costs continue upwards in health care (with the Patient Protection and Affordable Care Act promising even more), almost all interest ever earned has had to go to wage supports or got eaten in investment losses, leaving little to be swept for the foreseeable future, even as the fund never has been targeted for this. Still, proponents of the measure argue it should receive this special level of protection.

But this would cordon off a fund that, unlike the others already granted this privilege, is very narrowly tailored with the prospect of great change to come to the health care industry. In particular, future policy should deemphasize nursing home usage and increase flexibility of uses of long-term health care dollars. This trend will affect the state more than most, because of past decisions (such as the fund’s establishment, through federal money) that have significantly favored nursing homes to the point they enjoy generous provisions that inefficiently use taxpayer dollars.

In this environment, it does the state no good to reduce deliberately the flexibility it needs to respond, which passage of this amendment could do. For example, what if the state decided it needed more funds to come into its Community Choices Waiver, which allows senior citizens to live independently (and at less cost to the taxpayer) but was blocked by the amendment from withdrawing the money out of the Fund? This would force money into nursing home expenditures and drag along with them some elderly who could have lived independently into nursing homes, perverting the ideal money-follows-the-person idea into person-follows-the-money.

Proponents, without really knowing what they are talking about, will spout platitudes (and implicitly back the nursing home industry that wishes to keep this advantage) about how a vote for this amendment intends to “protect the elderly” – including legislators who should know better. In fact, the hurdle it puts up creating incentives to warehouse the elderly most in need does exactly the opposite to protect their ability to maximize living autonomously. As such, the voting public needs to defeat it.

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