Thursday, May 22, 2014

Thursday, May 22, 2014

State health insurance plan is almost broke; Medicaid expansion dead for the session, Louisiana First plan moves to the House; Talk of special session begins; Tax collections still down in 26 states; and Public defenders rely heavily on fees from the poor. 45 — The percentage of income generated by court fees for the New Orleans Public Defender’s Office. (Source: NPR)

State health insurance plan is almost broke
The fate of the “reserve fund” in the state employee health plan isn’t the type of thing that typically concerns legislators in the waning days of a session, when the fate of hundreds of bills hangs in the balance. But the warning that came out Wednesday about the Office of Group Benefits should serve as a siren call to anyone worried about the state’s long-term ability to pay its bills and keep its promises to its employees and retirees. As The Advocate reports, the OGB’s bank account has been drained rapidly in recent years and is expected to have just $55 million left by December — a tenfold decrease from the $525 million it had in reserve in April 2011. The Legislative Fiscal Office told legislators that the state is burning through its savings at a rate of $15 million to $20 million a month.

The truly sad part about this is that it’s not a bit surprising. The state has eliminated tens of thousands of jobs in recent years, meaning fewer people are paying premiums into the fund that pays benefits to current and retired workers. And Gov. Bobby Jindal’s administration has lowered employee premiums at a time when health care costs continued to rise.

Nor should anyone be surprised by the way this problem is likely to be resolved: With the state and its workers paying higher health care premiums, which will eat into the Legislature’s ability to fund other priorities. Workers, meanwhile, will likely see fewer benefits or higher co-pays as the state tries to cut costs — all to pay for the profligacy of the past few years.

Medicaid expansion dead for the session, Louisiana First plan moves to the House
The House Committee on Health and Welfare put the last nail in the coffin for expanding health care coverage to thousands of low-income Louisianans. Several bills that would have expanded Medicaid eligibility to adults who earn up to 138 percent of the federal poverty level ($33,000 a year for a family of four) were soundly defeated by largely party-line votes. This leaves those in the “coverage gap” — adults who make too much money to be Medicaid eligible but not enough money to reasonably afford health insurance — reliant on the charity hospital system whose financial future is in question.

The Senate, which denied Medicaid expansion earlier in the session, overwhelmingly voted to advance Senate Bill 682 by Sen. Ben Nevers. The “Louisiana First America Next” plan is based on proposals offered by Gov. Bobby Jindal’s Virginia-based policy organization. It seeks to transform the Medicaid program into a federal block grant that states would use to develop their own health plans. LBP’s Steve Spires analyzed the plan and found that the numbers just don’t add up to better care.

Talk of special session begins
With less than two weeks left before adjournment and serious questions remaining about the state’s finances, Democratic leaders are suggesting a special session may be necessary in order to solve the state’s budget problems. “Issues include the federal government rejecting the state’s acceptance of advance lease payments for the privatization of public hospitals. At the same time, higher education currently is relying on state treasury loans to maintain cash flow because key revenue sources have yet to materialize.”

Tax collections still down in 26 states
While many state governments have rebounded nicely from the Great Recession, tax collections in Louisiana are still 15 percent below their pre-recession peak, according to a Pew Charitable Trust analysis of Census Bureau data. Louisiana is one of 26 states that were still trying to reach pre-recession tax collections by the end of 2013, and one of just five states where tax collections are more than 15 percent below their previous peak (Alaska had the steepest drop, at 59.9 percent).

Louisiana’s poor ranking is likely influenced by two major factors: The fact that revenues were at an artificial high in 2008 due to an overheated post-Katrina reconstruction economy; and a series of irresponsible tax cuts passed by the Legislature during that time which have limited the state’s ability to fund basic services.

Public defenders rely heavily on fees from the poor
The latest installment in NPR’s excellent investigation into the excessive court fees being charged to poor defendants put the spotlight on public defenders in Louisiana. The “Guilty and Charged” report found that New Orleans charges indigent defendants a $40 application fee to get legal representation, and tacks on $45 if the accused pleads or is found guilty. “I’m very sympathetic to clients who feel like: Hey, you make money if I go down; you don’t make a thing if I’m innocent. Should I even believe that you care that I’m innocent? And those are very tough questions that we have to answer as an organization, but also as a community, as a country that believes in fairness and due process,” said Derwyn Bunton, chief public defender for New Orleans.


45 — The percentage of income generated by court fees for the New Orleans Public Defender’s Office. (Source: NPR)