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Deficit maneuvers highlight future health spending conflict

First there was, then there wasn’t, and now one must wonder whether there’s more than meets the eye to spending decisions made concerning Louisiana’s Medicaid program.

In September, Secretary of Health and Hospitals Alan Levine asked permission from the Legislature (through its Joint Committee on the Budget) to cut some spending as a result of a projected deficit. Most of his requests were acceded to after criticism about how perhaps the action was premature or accounting practices weren’t painting an accurate picture.

Then, Levine announced days after this was granted that, rather than a deficit, there was an even larger surplus. This appeared because of fewer demands on services as a result of delayed entry of people into the health care system as a result of the hurricanes blowing over the state in September. Levine specifically mentioned some 400 waiver slots for home- and community-based care programs going unfilled that did not make claim on resources. He also pointed out that these expenses were going to happen, they just had been postponed.

The timing seemed curious, as some observed that the 2005 hurricane experiences could have been used to make better projections, while others thought the predictive historical data being used were too sparse, and still others thought the projected deficit of $81 million could be worked through internally with a $7 billion annual Medicaid budget without budgetary intervention. However, state Rep. Jim Fannin ascribed political motives when he wondered whether Levine already had known the number might come in better before arguing for the fixes.

Fannin’s musings certainly seem credible. And Levine’s numbers don’t quite add up: if there was $181 million swing in resources, for 400 waiver slots on an annual basis the typical recipient might cost about $70,000 annually, that’s only $28 million of concern.

It’s possible that Levine’s actions are accounted for by larger policy and budgetary concerns. With the state looking more certain to encounter future difficult budgetary times and a major component to reduce those being restructuring of health care, the Gov. Bobby Jindal Administration may have seen this projected deficit at the time as being a persuasive element to start implementing a move from the less efficient institutional-cased health care system to a more cost-effective home- and community-based system.

The changes accepted by the committee for the most part addressed money going to institutions. The one change that was not sanctioned, which essentially would have lowered payments going to rural hospitals, also did. It is possible that the Jindal Administration thought these kinds of changes – many in fact which appeared to be contrary to federal regulations that may have resulted in denial of funding from that source, or were outright duplicative in nature thus wasteful – would bring resistance from the strong institutional health care lobby and that any hint of a crisis could overcome that among legislators who in the past have been reluctant to move the state in a better direction on indigent health care structural spending.

Fannin and his ilk may cry about political motives, but that fact is these changes they made last month were justifiable without any crisis real or imagined. That there was such resistance to them by legislators regardless shows that politics may be a significant obstacle to providing improved, less costly health care that reduced deficit aggravation in Louisiana.

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