If Louisiana embraced the health care redesign model suggested by the U.S. Department of Health and Human Services, many Louisiana residents would be left without insurance, others who obtain insurance would get inadequate coverage and the state’s safety-net providers would be left without the necessary support to provide care to those who remain uninsured.

This is the conclusion of an independent analysis prepared by the Center on Budget and Policy Priorities, a national nonpartisan policy organization. The organization recently released these findings after conducting a review of the Bush Administration’s “Affordable Choices” health care initiative. In conducting the review, the Center studied the Administration’s response to the health care redesign plan put forth by Louisiana last October.

The Center recognized that the federal government pressed the Louisiana Redesign Collaborative, a 40-member volunteer panel, to adopt a redesign model that was consistent with the Administration’s desire for private health insurance as the way to address the issue of the uninsured. And, the Center on Budget and Policy wrote that the Administration’s response to Louisiana’s concept (also in line with the Affordable Choices model) redirects existing Medicaid disproportionate share hospital payments (DSH) to fund the insurance model.

The Center on Budget and Policy Priorities’ analysis is consistent with Louisiana officials who believe the HHS proposal to be problematic because it leaves more than half of the current uninsured without insurance coverage or a safety net provider.

In its report, the Center on Budget and Policy wrote, “The HHS proposal would provide only enough funding to cover half of the state’s uninsured, while eliminating all of the federal funding for the health care safety net that provides care for the uninsured.”

The report also agrees with Louisiana officials by recognizing that HHS’s assumptions about the costs of providing coverage to the uninsured are significantly below Louisiana’s estimates. “The difference is attributable in part to the fact that HHS failed to factor in the state’s estimate that 17 percent of the childless adults who would be covered . have a chronic illness or disability.” This greatly increases the cost of coverage, according to both DHH and the report.

The report said, “The difference in cost estimates is particularly important because Louisiana would bear all of the risk if health care costs under the plan prove higher than HHS has estimated.”

Because HHS requires the plan to be budget neutral to the federal government, any costs that are greater than the HHS estimate must be borne by the state. By not factoring in the extra costs needed to care for adults with chronic conditions or disabilities, Louisiana would have to restrict eligibility, reduce benefits, lower payments to insurers or find more money to fund the program.

Dr. Fred Cerise, DHH secretary, has repeatedly said that the state cannot sign an agreement with the federal government that will immediately put the state at financial risk.

Even though Louisiana has the fourth largest allotment of DSH funds in the country, according to the report, ”(the analysis shows) the Affordable Choices program would not eliminate the need for payments to safety-net health care providers.”

Other findings from the report prepared by Center on Budget and Policy include:

• Affordable Choices favors the unregulated health insurance market with a preference for individual rather than group coverage.

• Although Medicaid coverage is substantially less expensive than private health insurance, state plans to expand Medicaid to cover more uninsured would not be approved under Affordable Choices.

• Should Louisiana want to use premiums or co-pays to help fund an Affordable Choice-model program, there is ample research to show that cost-sharing (even low-cost premiums) result in a sharp decrease in participation by low-income earning individuals.

• In its response to Louisiana, HHS allotted $1,884 per year for coverage for childless adults with incomes below 200 percent of the poverty level. This is far below what it would actually cost to purchase private coverage (the average cost in 2004 was $3,998 annually.

Submitted by Rob Anderson. Filed under Post-Hurricane Healthcare

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