Jindal Proposes Sweeping Medicaid Overhaul

Health Care News – Heartland Institute (Chicago, IL), February 1, 2009
Louisiana Gov. Bobby Jindal (R) has unveiled a proposal for overhauling the state’s Medicaid program, altering both its funding and delivery.

“It is time for us to do something different, and dramatically different,” said the state’s Health and Hospitals secretary, Alan Levine, at a December 1 briefing on the Louisiana Health First initiative. “We cannot change the system on the margins.”

Flat Fee

Jindal’s proposal centers on moving portions of the state Medicaid program to the private sector. The cost to taxpayers should be lower and outcomes better than under the current, state-run system, sources close to the proposal said.

Under the new system, Medicaid recipients would be able to choose among several private health coverage plans. State counselors would be available to help recipients make the best choices.

Louisiana taxpayers are currently paying $6.7 billion annually for Medicaid, according to state figures. The program is operated on a fee-for-service basis, with providers voluntarily taking on poor patients and billing the state government for reimbursement.

Under Jindal’s plan the fee-for-service payment method would be scrapped and replaced with a flat-rate monthly fee, which would vary based on enrollee health and risk. Plan administrators would negotiate reimbursement fees directly with providers, hospitals, and pharmacies and would coordinate patient care within the network.

Funding Available

According to the Louisiana Department of Health and Hospitals, the program would be financed by donations now going to the LSU Charity Hospital system, federal Medicaid debt forgiveness, and savings resulting from more-efficient care.

Medicaid is unsustainable in its current form, said Levine, and the situation will only worsen if costs continue rising faster than inflation.

Accountability Praised

Experts approved of Jindal’s proposal to make the state’s bloated Medicaid program more efficient and accountable.

“While the Jindal-Levine plan is not perfect, it is a step in the right direction,” said Adam Frey, a policy associate at the Pacific Research Institute. “The plan correctly acknowledges such key concepts of health policy reform as accountability, consumer choice, cost efficiency, marketplace competition, and transparency.”

“Most states envision maximized federal payments as the solution to their Medicaid shortfalls,” said Devon Herrick, a senior fellow with the National Center for Policy Analysis. “Governor Jindal should be applauded for refusing to merely shift Louisiana’s excess spending onto federal taxpayers, and instead working to increase accountability and decrease costs.”

National Takeover Predicted

Some Louisiana lawmakers oppose restructuring the state’s insolvent Medicaid system because they expect the Obama administration to shift all state responsibility for health care to the federal government.

“Why do we need to act now when a comprehensive federal plan is forthcoming?” asked state Rep. Herbert Dixon (D-Alexandria) at the December 1 briefing. The state should be in no rush to overhaul its programs when the Obama administration will be implementing significant health care changes in the near future, Dixon explained.

Change Seen As Urgent

Levine countered that the state cannot afford to wait for the federal government to act on its behalf regardless of what changes might be coming from Washington.

“We cannot continue on the same path and expect a better result,” said Levine in a release. “Just two years ago, Medicaid represented only 8.5 percent of the state general fund budget. Projections are that by 2011, Medicaid will consume more than 21 percent of the state general fund budget. Without appropriate, quality, sustainable health care, existing poor health outcomes in Louisiana will continue to deteriorate.”

Frey agreed, saying the state needed to act quickly to emphasize private, market solutions to its growing Medicare mess.

“Government-run health care is inherently flawed, so any attempt to reform a system such as Medicaid is naturally going to be difficult,” Frey said. “Governor Jindal recognizes this fact, which will also be important for the Obama administration to remember once in office, as it seeks to expand the role of government in our health care.”

Approval Pending

Jindal hopes to establish pilot programs to test the private managed-care proposal in four Louisiana cities (Baton Rouge, Lake Charles, New Orleans, and Shreveport), according to the state’s Department of Health and Hospitals. The proposal must be approved by the state legislature and the White House before the pilot programs can go forward.

“Jindal is probably the best person to pursue Medicaid reform, with his extensive background knowledge of the system,” said Amy Menefee, director of communications at the Galen Institute.

“His plan includes coverage options for Medicaid patients and incentives for healthy behavior and personal responsibility, while targeting waste and fraud in the system,” Menefee added. “He was elected on a promise to reform his state’s government and get rid of corruption, and tackling Medicaid is a vital place to start—and something all states will have to face.”

Joe Emanuel ([email protected]) writes from Georgia.

For more information …

Louisiana Health First Proposal (Louisiana Department of Health and Hospitals):

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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