Is the federal government playing politics with Louisiana hospitals?
The Advocate’s opinion writers are asking if politics played a role in the federal government’s rejection of Louisiana’s charity hospital privatization deals. First up was conservative commentator Quin Hillyer, who thinks the “president’s petty politics” are the main reason why the Centers for Medicare and Medicaid Services won’t approve the state’s use of upfront lease payments to close a 2012 budget gap. This morning the newspaper’s editorial board picked up on that theme, but suggests that Gov. Bobby Jindal’s political maneuverings may also have contributed to this mess. “If you are the governor of a small state and you criticize the president of the United States every time you take a breath, then you ask the health agency in the president’s administration for a very significant discretionary waiver — what do you expect to get?”
There is, of course, a third option: That CMS officials rejected the state’s unique financing plan because it doesn’t conform to federal rules, and that the career professionals who make such decisions don’t pay attention to the political back-and-forth between the president and the governor.
Whether or not politics played a role, the rejection poses an immediate threat to Louisiana’s budget and the hundreds of thousands of low-income adults who depend on the state’s safety-net hospitals. Melinda Deslatte of The Associated Press notes: “But the Jindal administration is downplaying the problem, suggesting it can be solved through appeals or continuing negotiations with federal officials. If the Republican governor’s interpretation of the problem is wrong, the state’s long-term budget could face sizable gaps and health care services could be threatened for thousands of poor and uninsured residents around Louisiana.
“If Jindal’s wrong and lucky, he’d leave the mess for his successor to clean up in 2016. For now, with no real idea what the scope of the problem might be, lawmakers are going along with Jindal’s push to stay the course on the hospital privatizations, with fingers crossed that it all works out.”
Reserves for state employee health plans decline to dangerous lows
Louisiana lawmakers are dealing with more bad financial news this week, as reserve funding for the state employee health insurance program has dropped by half in two years. While many decisions impact reserve levels, one key reason for the significant decline was a decision by the Jindal administration to reduce insurance premiums despite growing claims payments. Retired State Employees Association executive director Frank Jobert told The Advocate, “…if (the reserves) go too low, there will have to be a big rate increase to get it back up, or higher co-pays or reduced benefits hitting retirees and employees in their pocketbook.” A drop in reserves also affects the state budget since the state pays three-quarters of the insurance premiums for its employees and retirees. But Commissioner of Administration Kristy Nichols brushed off the concerns (her response to every state fiscal crisis, according to Bob Mann) because the state has identified “significant” opportunities to lower costs—such as using wellness programs to fight obesity.
Ending state competition for US-based companies
State and local governments spend more than $80 billion each year in tax breaks and subsidies to lure companies from other states and localities. Council on Foreign Relations senior fellow Edward Allen writes in the New York Times that this is “as dumb as it gets.” Rather than allowing such divide-and-conquer strategies to decimate state coffers, Allen says states should band together to adopt standards that discourage such bribery practices. These models already exist for international trade. The World Trade Organization restricts foreign government subsidies and permits countries to impose punitive tariffs on imports of subsidized goods. Additionally, the Organization for Economic Cooperation and Development limits financing subsidies to exporters. Allen says states could adopt versions of these international models by showing the public how much corporate subsidies really cost and then entering into compacts to limit subsidies. The federal government has a role to play too — ensuring that states do not lose businesses to international competitors like Canada.
BESE to consider new budget today
The state top education board is holding a special meeting today to amend its $3.6 billion spending request for Louisiana’s K-12 schools. The meeting of the Louisiana Board of Elementary and Secondary Education (BESE) comes after the Senate Education Committee rejected its original funding plan. The Advocate reports that BESE may do away with the automatic 2.75 percent inflation adjustments, ignoring complaints by union leaders and school superintendents that the money is needed to cope with steadily rising costs. But lawmakers were concerned that the provision would tie their hands, forcing funding increases even if the Legislature failed to agree on a new spending plan. A proposed amendment would retain plans to increase per student spending by $70 million this year, but would remove language that would allow increases in future years without legislative approval.