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Opponents to LA indigent care reform show hands

Battle lines have become clearer as a result of testimony in front of the Louisiana Senate’s Health and Welfare Committee regarding the future of indigent health care, starkly illuminating the direction of this policy the decision about which could provide better health care at reduced costs if vested interests don’t get in the way.

A group of private health care providers and insurers argued for a modified money-follows-the-person system to replace the current money-goes-to-the-institution indigent care model that, unique among the states, Louisiana follows. Its plan calls for steering 61,000 uninsured adults into managed-care "medical homes." The group said the premiums would average $194 a month for an annual cost of $156 million, which would come from the "disproportionate share" of Medicaid dollars that now pays for most of the care in the Louisiana State University-run charity system.

But members of the committee were unimpressed, and their comments are instructive in terms of how opponents will try to attack this reform if instituted statewide – policies that more states are adopting to improve outcomes often at reduced costs for the indigent. State Sen. Cheryl Gray remarked the idea didn’t seem to have an endorsement from LSU nor the state’s Department of Health and Hospitals.

As far as the latter, its Secretary Alan Levine made approving noises about the plan but stopped short of endorsing it. This reluctance should prove temporary on theoretical and practical grounds. Levine probably is looking to roll out a plan similar to that he helped institute in Florida which would skip the “medical home” concept and go straight to the vouchers, but he is not yet ready to do so and tactically probably would wait until the next fiscal year after the legislative session has ended (the state needs no legislative action on this, just approval of a waiver request to the federal government).

Also, Levine needs to finish a recommendation on the size of the new “Big Charity” hospital in New Orleans. Simply, a plan along these lines would mandate a decrease in the size of the palatial facility envisioned by the Kathleen Blanco Administration, and would make sense only if Levine and his boss Gov. Bobby Jindal backed a smaller-sized hospital. And, of course LSU never would endorse such a plan because it would be taking money from that agency, so Gray shouldn’t hold her breath on this one.

The fact that temporary facilities currently serve the New Orleans-area indigent is why the plan envisioned just starting in that area; politically speaking, it wouldn’t threaten existing LSU resources in other areas of the state. State Sen. Sherri Smith Cheek thought that wasn’t good enough and said she couldn’t justify that to her constituents, that it was unfair. But if Levine rolls out a similar plan to go statewide, watch for Cheek to change dramatically her tune, to sound like state Sen. Joe McPherson.

McPherson, who operates a series of nursing homes, called the cost figures “unrealistic” and said health care premiums for his employees are at least 250 percent higher. Understand that this conflict is quite personal to McPherson: if the state succeeds in steering money away from institutions on this front, his nursing homes, the collective of which in Louisiana are probably the most inefficient users of taxpayers dollars in the entire nation according to the Louisiana Legislative Auditor and which typically derive the vast majority of their revenues from government payments, might be next.

Of course, being in an industry so heavily regulated and subsidized by government, McPherson is a poor judge of what actual costs are. Using a pioneer state in this kind of plan extending not just to the indigent but the uninsured, Massachusetts, a state with higher costs but healthier people, had for a standard set of benefits a target premium for a 37 year-old single male at $250 a month, but the marketplace currently actually prices it at $184. That is consistent with the coalition’s estimate, not McPherson’s. (And Massachusetts is seeing lower costs and improved outcomes.)

Expect these kinds of arguments to resurface if and when Levine forwards an indigent care plan, integrated with a smaller Big Charity, along the lines of the Massachusetts model restricted to the indigent. This is because senators like these and their allies have as their primary goal not more efficient delivery of health care to the indigent, but that big government be as involved as possible in its delivery to protect powers, privilege, and patronage of the existing LSU hospital system. They are believers that big government makes better decisions than do individuals, and that state employees’ jobs and agency resources must be protected.

Hopefully, that is not the attitude of the Jindal Administration and it will prove as such over the next several months.


Anonymous said...

There are some truths mixed with many misperceptions in Professor Sadow's piece, so reader beware. My comment focuses on one outright factual misstatement, which is really the premise of the entire piece. It comes in the brief description of the Massachusetts reform, with which I am very familiar, because I am a health care access attorney in Massachusetts, and was part of the coalition that passed the reform law in 2006. Professor Sadow states that "Massachusetts is seeing lower costs and improved outcomes." Wrong. Massachusetts is seeing higher costs and there is as yet zero evidence of improved outcomes. Fortunately, so far, Massachusetts is committed to staying the course, only because there was no false advertising about reform, as I am afraid exists in Professor Sadow's sales pitch. Finally, what works in Massachusetts will only work in Louisiana when several elements are put in place that have existed in Massachusetts for a long time.

Anonymous said...

The present reality is that Medicaid reimbursement rates are too low to attract provider participation in many specialties. Last time I checked, orthopedists, neurosurgeons, cardivascular surgeons, and cardiologists accepting Medicaid patients were scarce as hens' teeth.

Unless provider reimbursement rates are raised, cutting funding for the charity hospital system will leave a tremendous vacuum in healthcare access.

I'm not sure why, but Sadow has an axe to grind with the charity hospital system.

All of this sounds like the same old tired, social Darwinism that the Republicans love.

Jeff Sadow said...

>Massachusetts is seeing lower costs and improved outcomes. Wrong.

I guess you didn't check the link attached to that paragraph, which contradicts what you write. Either the researcher or you is wrong, and, sorry, I put more trust in the researcher's data than in your observations. (He does point out implementation has had its problems, mainly because of too much government involvement which is noe unfortunate thing both MA and LA state governments in general share.) What may be confusing you is that, under what now is essentially compulsory, somewhat subsidized insurance, total costs may be going up.

>which is really the premise of the entire piece

Then you didn't read it carefully enough, if you think that. The actual premise is that a market-driven approach focusing on individuals is going to produce better outcomes and lower costs -- maybe not tomorrow as there will be transition costs, but in the near future. And Massachusetts isn't the only example I could have used, but it's probably the most well-known, given Romney's presidential foray. Note I am not saying that the MA system should be imported exactly into LA, nor that it is a panacea, but that if we take the basic concept of it -- universal insurance -- and apply its principles to the narrower pursuit of universal insurance of the indigent, that it will produce a superior system that LA has.

>I'm not sure why, but Sadow has an axe to grind with the charity hospital system.

You should read my other posts on this issue and you'd know I have the same "axe to grind" as any other taxpayer interested in better provision of services -- the charity system by its inefficient, government-dependent system, has worse outcomes and very probably (because we've not tried it here, but theory suggests it) higher costs. And also by those who are appalled that we don't have a better system of indigent health care to take better care of people.

Do a search on the blog and you'll see more extensive explanation of all of this.