Wash. Times: Landrieu's “big payday” would increase federal outlays to Louisiana

Wash. Times: “Mrs. Landrieu's big payday” means that “each $1 Louisiana spends will be matched by $4 in federal funds. In a November 30 editorial, The Washington Times claimed that Sen. Mary Landrieu (D-LA) ”didn't even blush about selling her vote" for the Senate health care bill, calling the Louisiana Medicaid fix “Mrs. Landrieu's big payday.” The editorial went on to falsely claim that the proposal would increase Louisiana's Medicaid reimbursement rate: “Right now, each dollar that Louisiana's Medicaid program spends is matched by $1 in federal funds. If Senate Majority Leader Harry Reid's bill passes, each $1 Louisiana spends will be matched by $4 in federal funds.” [The Washington Times, 11/30/09]

Under Senate bill, Louisiana's Medicaid assistance reportedly still set to decrease

Louisiana FY09 reimbursement rate: 72.47 percent. According to the Department of Health and Human Services (HHS), the federal government provided 72.47 percent of Louisiana's Medicaid spending for the fiscal year that concluded September 30, 2008. HHS initially set Louisiana's Medicaid reimbursement rate at 71.31 percent for the fiscal year that concluded September 30, 2009. The American Recovery and Reinvestment Act reinstated fiscal year 2008 rates for states scheduled to receive a lower reimbursement rate for fiscal year 2009.

Recovery act temporarily instituted an additional increase in reimbursement. The American Recovery and Reinvestment Act passed in February also provided a temporary general increase of 6.2 percent in FMAP for each state. The bill provided further assistance for states with higher unemployment rates. [American Recovery and Reinvestment Act]

Times-Picayune: "[I]f the bill as written becomes law," Louisiana's FMAP would decline from current effective rate of 81.48 percent to 68.04 percent. In a November 20 article, the New Orleans Times-Picayune reported on Landrieu's amendment to reduce the scheduled cut to Louisiana's reimbursement rate and stated that the “net result” of temporary stimulus measures “is that the federal government is paying 81.48 percent of Louisiana's Medicaid costs,” but that “if the bill as written becomes law, Louisiana's FMAP percentage in 2011 would be 68.04 percent instead of dropping to 63.61.”

From The Times-Picayune:

FMAP refers to the federal medical assistance percentages, or the percentages of state Medicaid spending the federal government covers.

Poorer states as measured by per capita income, like Louisiana, get more federal help. However, Louisiana is facing a huge reduction in federal assistance in fiscal 2011, because the FMAP percentage for that year is based on per capita income for calendar years 2006-2008, in the aftermath of Hurricanes Katrina and Rita. Louisiana experienced an unusual spike in per capita income in those years, in no small measure because of a large but temporary infusion of government, insurance and other recovery dollars pouring into the state.

The result is that Louisiana's FMAP percentage is going to drop 4 percentage points, from 67.61 percent in to 63.61, way more than any other state.

“That's huge,'' said Trinity Tomsic, a Medicaid analyst with Federal Funds Information for States, which analyzes the fiscal impact of federal budget and policy decisions on states.

But it gets much worse for Louisiana.

The stimulus plan increased the share of Medicaid paid by Washington for 27 months -- through the end of next year -- while sparing states any reductions in their FMAP formula in the meantime.

The net result is that the federal government is paying 81.48 percent of Louisiana's Medicaid costs, a figure that will plunge nearly 18 percentage points come Jan. 1, 2011. That would cost Louisiana, according to [Alan] Levine [Louisiana secretary of health and hospitals], some $900 million a year for the ensuing three years. It would, he has warned, wreck the state's budget.

The Obama administration has insisted that only legislation can fix the formula, and on pages 432 to 436 of the Senate health care bill is Landrieu's answer.

Section 2006 is entitled, ”Special Adjustment to FMAP Determination For Certain States Recovering From a Major Disaster.'' Louisiana is the only state that qualifies. Landrieu's remedy would halve any decrease in Louisiana's FMAP percentage for 2011 from the 72.47 percent in place before the stimulus was enacted. In other words, if the bill as written becomes law, Louisiana's FMAP percentage in 2011 would be 68.04 percent instead of dropping to 63.6. [The Times-Picayune, 11/20/09]