Insurance, Federal Payouts Create Medicaid Problem in Louisiana

Louisiana Gov. Bobby Jindal says post-storm damage payments from insurance settlements and Louisiana’s Road Home program following Hurricanes Katrina and Rita are contributing to a $1 billion Medicaid shortfall for his state. Jindall’s office says he is trying to work out a solution with federal officials over the looming crisis.

Medicaid, which serves the poor and uninsured, calculates payment schedules to the states based on per-capita income. That figure goes far beyond wages and salaries – including all payments from all sources.

Louisiana’s impending dramatic decrease in federal funding is due to what the governor says is a faulty calculation of sources of income in the state, including insurance and Road Home payments after the 2005 storms. From 2005 to 2007, according to the Bureau of Economic Analysis, Louisiana’s per-capita income is reported to have increased by 42 percent – a dramatic, sudden increase which will drop the state’s federal Medicaid funding, according to the governor’s office.

Jindal says Louisiana’s reimbursement rate will drop from as high as 73 percent to 60 percent – forcing cuts to either public health or higher education. Within the next year, Louisiana will face the largest decrease of federal Medicaid funding in the nation – a decrease almost twice that of the state with the next largest decrease, North Dakota, the governor’s office said.

Louisiana’s Medicaid funding, which would normally be 72 percent, is temporarily enhanced by the federal stimulus. This coming October, it will decrease to 67 percent, and then will decrease to 63 percent in October 2010. The drop from 72 to 63 percent will cost the state an estimated $700 million per year. The state will start seeing this loss of funding this October, with the full impact starting January 2011.

Sources: Associated Press; Louisiana Governor’s Office, www.gov.state.la.us/

Topics Louisiana