Louisiana House Republicans who sit on the Joint Legislative Committee on the Budget refused to approve five Medicaid contract extensions that manage health care for 1.6 million people Friday (Nov.3).
The House GOP leadership said the state Department of Health needs to find a way to save more money and they would revisit the contracts in December, after health officials have had more time to cut costs. This was second time the Medicaid contracts haven’t gone through in the past three weeks.
The contracts are collectively worth $15.4 billion, roughly a quarter of the state’s operating budget, for 23 months. More than half of the funding for them comes from the federal government and they expire Jan. 31.
If they don’t end up being approved, it’s not clear how the state will manage Medicaid for most people who are enrolled in Medicaid, about 900,000 — or more than half — of which are children. GOP leaders said they expect the contracts to eventually be approved, they just want them picked over more thoroughly. Nevertheless, Gov. John Bel Edwards‘ administration painted a doomsday scenario.
“The whole Medicaid program is in chaos on Feb. 1” if the contracts don’t get approved, said Matthew Block, general counsel to Edwards, after the vote.
If it didn’t approve the contracts, the Legislature run the risk that of running out of money to pay for Medicaid before the end of the fiscal year on June 30. The managed-care organizations that receive these Medicaid contracts pay $200 million in taxes each year that help pay for health care. They wouldn’t have to pay that money if their contracts were canceled. The state also owes $150 million to the managed-cared organizations in delayed payments that they wouldn’t be able to put off again if the contracts were canceled, according to health officials.
Without the contracts, the state’s Medicaid program would be short $350 million for the budget cycle that ends in June. Block said the Medicaid program would run out of money in April.
At Friday’s joint budget committee meeting, all of the senators, including some conservative Republicans, voted in favor of approving the Medicaid contracts, but most House Republicans were opposed. The resulting 18-6 House vote killed the renewals.
“It is a shame that after an extra two weeks to prepare for this meeting and despite unanimous, bipartisan support from all of the senators on the Joint Budget Committee, some House Republicans again found a way to obstruct the important business of our state,” Edwards said in a written statement Friday.
Among the people who didn’t vote for the contracts were House Speaker Taylor Barras, R-New Iberia, and House Appropriations Chairman Cameron Henry, R-Metairie. Henry led the effort to vote down the contracts, which he said locked Louisiana into spending too much money. He also had questions about a recent studies that showed inflated spending in the Medicaid prescription drug program and poor oversight in other areas.
“This is one fourth of the entire state budget. That deserves a little more oversight,” Henry said.
Right before the Medicaid contract vote, health care officials with the Edwards administration had warned not approving the contract would cause a struggle within state government. The state now has to start behaving as if the contracts, with five managed-care organizations who coordinate Medicaid services, will never be approved, they said.
“If it’s not approved today, we start scrambling about to how we are going to provide services to the 1.6 million people we serve on February 1,” said Jeff Reynolds, chief financial officer for the Louisiana Department of Health. “I don’t have a clear path” for how to manage Medicaid without the contracts.
Block and Senate President John Alario, R-Westwego, both said they were caught off guard when House Republicans voted against the Medicaid contracts. Barras hadn’t told Block, who said he spoke to the speaker Thursday night, he planned to block the contracts.
“I’m not sure what is going to change between now and next month,” Alario said. “I’m concerned about these 1.6 million people in Louisiana.”
House Republicans used their concerns about spending within the Medicaid program as the reasoning behind voting against the contracts. But lawmakers have the ability to cut Medicaid spending during the spring legislative session even once the contracts are in place. They can cut funding for the Medicaid program in the budget, which would automatically reduce the contracts, Reynolds said. They can also put some restrictions in the budget on how the money can be spent.
Legislators may be frustrated because most of the cutting they can do to Medicaid ends up coming in the form of reducing or eliminating popular programs, such as services for children with significant disabilities.
Across-the-board cuts to Louisiana’s Medicaid program — where each type of funding would take a small hit — are no longer easy to make, according to health officials. Louisiana is already reimbursing Medicaid providers at the lowest rate that the federal government will allow, so a widespread cut in those types of payments is off the table.
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Julia O’Donoghue is a state politics reporter based in Baton Rouge. She can be reached at firstname.lastname@example.org or on Twitter at @jsodonoghue. Please consider following us on Facebook at NOLA.com and NOLA.com-Baton Rouge.