There has been a lot of talk about Sen. Mary Landrieu’s new-found 100 million reasons to support Sen. Reid’s health care bill. As she channeled her inner-Hamlet about whether or not she would support her majority Leader on a procedural vote today, Sen. Landrieu won language that would pump at least another $100 million into Louisiana’s Medicaid system.
Many have framed this as Sen. Landrieu “selling” her vote, which makes me think that she’s a pretty cheap date. When fully implemented, the Reid health care plan–under the most optimistic assumptions–will cost at least $200 billion a year. An extra $100 million here or there is a rounding error. $100 million is what you get to vote for the Postal Reauthorization, not the most sweeping revamp of our nation’s health care delivery system. If I were cast in the role of one of the “undecideds” on this bill, which to Sen. Reid is numbers one, two and three on his priority list, I’d hold out for at least $1 billion. But then, I’m from Illinois.
$100 million also seems to be a rather small amount on which to risk her political career. Granted, she doesn’t have to face the voters for another 5 years, but she’ll likely face a very competitive race against almost any credible Republican. The state’s demographics have changed a lot in the last few years. Throw in her support of a new government health care plan and she’ll face a competitive race against any Republican with a pulse. The full benefits of the plan don’t kick in until 2014 (how’s that for the URGENT need to pass this yesterday), but by then we’ll have had four years of the higher taxes attached to the plan. It is very possible that 2014 could be the absolute worst year for supporters of the plan to run for reelection. There will likely be all manner of disruptions and unintended consequences that year as the full weight of the plan makes itself felt. Against these problems, voters can be reminded that they’ve been paying higher taxes, fees and premiums for years building up to the new system going “live.” The ads write themselves.
But, there is something else more fundamentally insane about the Landrieu deal. In essence, she will vote for a new government expansion into health care if the government will “fix” its existing involvement in health care. In Landrieu’s opinion, current government health care policy is harming her state. If government “fixes” the current harm it is inflicting, she will support increasing its ability to harm lots more people. Really?
The issue revolves around the existing public option plan, Medicaid. To most people, Medicaid is the health care system for the poor and low-income. A kind of health care welfare, if you will. But, it is a bit more complicated than that. The program is a kind of federal-state partnership, where the states have an almost unlimited draw on the federal government’s checkbook. Whatever a state decides to spend on its Medicaid program the Feds will at least match. For poorer states, like Louisiana, the Feds will kick in extra money. So, the states have every incentive to expand their Medicaid programs as much as possible, since the Federal government will pick up at least half and generally more than half the bill. States have become very good at gaming this system.
Currently, the Federal government pays just over 67% of Louisiana’s Medicaid program. (In other words, for every $1 the STATE decides to spend, it only has to put up 33 cents.) After Hurricane Katrina, Louisiana vacuumed up federal assistance AND lost population. Because of this, it became relatively wealthier, measured on a per-capita basis, than it had been. So, starting in 2011, under current law, the feds will only pick up just over 63% of the costs of the state’s Medicaid program. (The state would have to spend 37 cents for every dollar IT decides to spend.) Landrieu’s $100 million buy-out will bridge this difference. Under her bargain, Medicaid’s system for reimbursing states will have a giant asterisk: the following formula applies, unless you are Louisiana.
The Landrieu bargain exposes the foundational flaw with government health care; it will be subject forever to the whims of politicians and the political process. A one-size-fits-all federal policy can never meet every extenuating circumstance. Things–and people–will inevitably “fall through the cracks.” But, because it is the government, there are few avenues to seek redress.
It is possible that Louisiana has a legitimate case that its federal match shouldn’t decrease. But, the legitimacy of their case means nothing to a federal bureaucrat. Fortunately for Louisiana, one of its Senators has found herself in the sweet spot of being a critical vote on priority legislation. Hopefully, the rest of us will be so lucky when we have a problem with our own health care.
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