Katrina cost us, Again

Tuesday, Apr 14,2009, 11:15:21 AM Click:

Copyright 2009 The Times-Picayune Publishing Company Times-Picayune (New Orleans)

April 12, 2009 Sunday

SECTION: METRO - EDITORIAL; Pg. 4

LENGTH: 699 words

HEADLINE: EDITORIAL: Katrina costs us, again

Louisianians who were hammered by Hurricanes Katrina and Rita would hardly regard the years following those storms as boom times, despite the insurance money and recovery dollars that have flowed into our devastated region.

Now, that same influx of money is being counted against Louisiana in its efforts to meet the health care needs of its poorest citizens, most of them children. The result will be a $700 million loss that will force cuts that state Health and Hospitals Secretary Alan Levine describes as "cataclysmic."

It's also unfair, and the Obama administration should make sure that poor Louisianians don't end up getting penalized for hurricane recovery.

The Medicaid financing formula that determines how much state governments must pay is based on the three-year average of each state's per-capita income. This budget year, the federal government pays 72 cents of every dollar spent on Louisiana's Medicaid program.

But that same formula will mean a sharp drop in the amount that the federal government pays in the near future: to 67.7 cents in October of this year and to 63 cents in October 2010. Federal stimulus money will allow the state to offset the loss through the end of next year. But by January 2011, Louisiana will be facing a $700 million annual loss.

The federal government uses a three-year average in order to avoid sudden spikes or decreases, Mr. Levine points out in a letter to U.S. Health and Human Services Secretary Charles Johnson.

But in this case, that very approach has the opposite effect and works against Louisiana. Post-storm economics, including private insurance payouts, federal grants to individuals and higher labor costs, have artificially skewed the income picture in Louisiana, Mr. Levine argues in his letter. He's asking the federal government to take our unique situation into account.

Mr. Levine suggests freezing this state's Medicaid ratios to an amount that's comparable to historic averages until the formula normalizes or adjusting the formula so that it doesn't take "extraordinary infusions" into account in figuring out per capita income.

That's a reasonable request, and the Obama administration should be willing to make such an accommodation. While 21 states actually will see their federal match increase in fiscal 2011, Louisiana is facing the largest decrease in the nation.

That would be tough to handle at any time. But it's especially burdensome for a state that's still struggling to recover, and it will hurt the 26 percent of Louisiana's population, mostly children, who depend on the program.

"Louisiana has a very honored tradition of enrolling our lowest income children in health coverage, with only 5 percent of our children currently being estimated to be without coverage," Mr. Levine wrote. The state is making efforts to expand access to children, he said, but "such significant reductions in federal funding -- particularly as a consequence of our hurricane recovery -- can only disrupt this progress."

Mr. Levine notes that the calculations show a 42 percent increase in Louisiana's per capita income from 2005 to 2007. That just doesn't line up with financial reality.

No one denies that Louisiana saw a huge influx of money after the disastrous losses caused by two major hurricanes and the failure of the federally built storm protection system in greater New Orleans. And Mr. Levine's letter acknowledges this state's gratitude for the help it has received.

But the needs following those catastrophes were overwhelming. People lost their homes and all their personal possessions. Businesses were wiped out. And even with insurance money and other assistance, recovery has been painfully slow and incomplete.

Storm victims who have had to rebuild their homes and replace everything -- cars, appliances, furniture and clothing -- wouldn't consider the insurance money or Road Home grants that they received to be income. The Internal Revenue Service doesn't consider it taxable income.

Louisianians aren't 42 percent richer since the storms of 2005 -- far from it. If the federal government insists on viewing our state as flush, our poorest residents will find that their post-Katrina suffering isn't over yet.

LOAD-DATE: April 13, 2009