NCPA - National Center for Policy Analysis


November 25, 2008

Name any health criteria, and Louisiana is probably scraping bottom.  In 2007, it was ranked 49th in health outcomes; in 2006, it was worst overall.  About a quarter of the population is uninsured, and although the federal government's "matching rate" pays out 71 percent of the state's Medicaid costs, state spending has doubled to 16 percent and is projected to rise to 22 percent by 2011.  Fortunately, Bobby Jindal, Louisiana's prodigy Governor, has a plan, says the Wall Street Journal.

Under Jindal's plan -- which is basically a defined contribution plan:

  • Working-poor Medicaid recipients will be steered away from the current "fee for service" program -- the state pays a set rate for all healthcare charges (some 54 million this year) -- toward private managed-care plans, with Louisiana paying a fixed per-patient amount, adjusted for health risks.
  • Physicians and hospitals will be compensated for outcomes and will get incentive payments for good performance.
  • Since Louisiana will increase the value of its Medicaid dollars and free up other funding, it will also be able to expand eligibility; the initiative will start with about 380,000 people in New Orleans, Baton Rouge and 2 other regions, with the rest of the state integrated over the next 5 years.
  • The hope is that by integrating fee for service's separate silos and realigning incentives, the quality of the delivery system will also improve.

However, Jindal will need a federal waiver to proceed and currently, Louisiana's negotiations are hung up on $771 million that the feds claim the state owes, much of it in alleged "overpayments."  The Bush Administration's go-ahead is a matter of urgency.  If the talks aren't wrapped up soon, Louisiana will be forced to start over with Barack Obama's team, which will be hostile to reforms that bank on the private sector.

Either way, just the transition itself could delay things for six months or a year or more, says the Journal.

Source: Editorial, "Jindal's Medicine," Wall Street Journal, November 24, 2008.

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