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Budget brief: Looming Medicaid cuts threaten Louisiana’s health care system and put lives in jeopardy

Posted on April 13, 2018

Click here for a PDF version of this brief.

As the end of state fiscal year 2018 nears, Louisiana’s state agencies and administrators are trying to figure out what their budgets might look like come July 1. For now, they have to plan as if the state will go over the “fiscal cliff,” meaning the Legislature will allow almost $1.4 billion in temporary taxes to expire without enacting any replacement measures.

There is still an opportunity for state lawmakers to go into a second special session and raise revenue to avoid the fiscal cliff. But for now, state agency leaders have had to come before the budget writing committees – House Appropriations and Senate Finance – to share the impact on programs and services if they had to cut hundreds of millions of dollars from their agencies’ budgets.

Medicaid would be program most impacted by fiscal cliff

The state’s Medicaid program, administered by the Louisiana Department of Health (LDH), is the area of spending that would be most deeply cut if the Legislature does not enact revenue raising measures. The executive budget proposes a $656 million cut in state funding for Medicaid, which would trigger the loss of $1.58 billion in federal Medicaid funding and $168 million from other sources. The result is a $2.4 billion cut to a program that serves Louisiana children, people with disabilities, the elderly and people with very low incomes. That’s a reduction of nearly 20 percent compared to current funding levels.

The proposed cuts to Medicaid would have an enormously negative impact on patients, families, health care providers and the state economy. Nearly 1.6 million Louisianans receive health insurance through Medicaid, including 737,000 children, 168,000 people with disabilities, and 57,000 seniors. The health care providers who treat Medicaid patients provide life-saving services, so the biggest threat posed by the proposed cuts is the possible loss of lives. The elimination of some Medicaid services would reduce quality of life for tens of thousands of vulnerable Louisiana residents and their families.

The secondary effects of the proposed cuts are also alarming. The impact of taking $2.4 billion out of Louisiana’s health care system would have negative ripple effects for the state economy and jobs. State economist Manfred Dix told legislators that if proposed Medicaid cuts take effect, the result would be 57,000 jobs lost from the Louisiana economy in the first year alone.

The human impact of cutting Medicaid programs

Secretary of Health Dr. Rebekah Gee and her staff have come before the House Appropriations and Senate Finance Committees to share with legislators the real consequences of the proposed Medicaid cuts. Each of the reductions would have a human impact – by reducing or eliminating vital medical services that patients rely on. The health department has calculated the number of patients that would be affected by each proposed program cut.

The cut that would impact the greatest number of people is the elimination of the Medicaid Long-Term Care Special Income Level program. This program allows more than 46,000 elderly, blind and disabled people who earn above the traditional Medicaid eligibility threshold ($750/month) to receive long-term care in nursing facilities or via home and community-based services. Under the special income program, individuals who earn up to $2,250 per month ($27,000 per year) are eligible to receive services they would otherwise be unable to afford.

More than 18,000 adults would lose mental health services they currently get, and 7,300 adults would lose access to substance abuse treatment.

Waiver services top list of priorities for restored funding

Gee also shared a list of what program funding would be restored first if additional state general funds become available. Topping the list are the waiver programs and other services that allow people with disabilities and seniors to receive care in their homes, which keeps them from having to live in a nursing home. Toward the bottom of the list are supplemental payments to the private operators of what was formerly the state’s charity hospital system and adjustments to nursing home payments.

The ripple effects of cutting public-private partnership hospitals

Under the executive budget, the state’s safety net hospitals, which are operated by nine private entities as  public-private partnerships, would be subject to a $206 million cut in state general funds due to the elimination of supplemental Medicaid payments. Two of the private operators, LCMC Health in New Orleans and Lafayette General Health in Lafayette, have already sent letters to Gov. John Bel Edwards and leaders in the Legislature threatening to walk away from their contracts if the state doesn’t honor the deals by providing full funding.

If the hospital contracts are broken, it would create havoc for patients as well as the faculty physicians, students, post-graduate residents and other allied health professionals who use them as a training ground.  Officials at LSU Health Science Center of New Orleans have said it’s unlikely the state would be able to find new private operators willing to run the hospitals at the reduced rate. Medicaid residents at LSU New Orleans and LSU Shreveport would no longer be able to serve in the hospitals, which would take 463 resident physicians and 418 LSU faculty physicians out of the state’s health system.

The Legislature must act

The cuts to Louisiana’s Medicaid program are entirely avoidable. State lawmakers can and should come together in a special legislative session to replace the temporary taxes that are expiring and protect vulnerable Louisianans from the harm that would be caused by the proposed cuts. Lawmakers have heard extensive public testimony on the budget, with people sharing the importance of live-saving Medicaid services they receive – services that are on the chopping block. Now, it is incumbent upon legislators to take action to stop those cuts from becoming a reality.

 

By Jeanie Donovan

April 13, 2018

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