BPW Foundation's Women Misbehavin' Blog

Well behaved women never make history

Debunking the So-Called “Louisiana Purchase”

Posted by egehl on March 19, 2010

If you don’t mind, please allow me the opportunity for a small rant.  It’s personal to my state, but because it has gotten incredibly drug through the mud by the national media and there’s a misconception it was included in the healthcare reform bill as “an unwarranted back room deal” I need to debunk the perception of the “Louisiana Purchase”.

I understand why the public is upset by “special deals” made by a few Senators including my own in the healthcare bill.  However what people don’t understand is that the so-called “Louisiana Purchase” is money desperately needed in my state because of a faulty federal formula that is out of our control, and penalizing the financial health of Louisiana.

As a result of Hurricanes Katrina and Rita, Louisiana received federal disaster aid to rebuild New Orleans and the Gulf Coast.  As a result, our economy was artificially inflated by the influx of billions of dollars of temporary, one-time hurricane relief monies.

Unfortunately these hurricane recovery funds are now having the unintended consequence of dramatically decreasing our state’s match rate for federal Medicaid funding, also known as FMAP. 

Every state receives a FMAP rate which determines how much the federal government will give that state in Medicaid funding.  The agency responsible for determining the average incomes for Medicaid matching purposes, the Bureau of Economic Analysis (BEA) in the Department of Commerce, looks at a state’s average per capita income to calculate the rate.  The rate is different for each state depending on each state’s income levels so poorer states receive a higher match. 

Unfortunately the last calculation of Louisiana’s average income included recovery monies therefore in the federal government’s eyes our state has a higher per capita income because of recovery dollars, which are now dwindling away.  The change in our FMAP rate is ironic given Louisiana is one of the poorest states in the nation, and needs Medicaid assistance desperately for our large impoverished population. 

All policymakers in Louisiana, including Republicans and Democrats, have been extremely concerned about FMAP and how it will impact our state budget.  Starting next year Louisiana will face a massive decline in federal Medicaid funding over and above what other states are dealing with because our state’s match rate will decline.

Louisiana faces the loss of an estimated $1.3 billion in federal Medicaid funding in state fiscal years 2011 and 2012, with an on-going, annualized deficit of almost $900 million. The Louisiana Department of Health and Hospitals (DHH) has announced that, if forced to absorb this level of funding reduction, it will have to reduce or eliminate critical programs serving the needs of Louisiana’s most vulnerable populations.  In addition, up to125,000 children from low and moderate-income families could lose their health insurance currently provided under Louisiana’s LaCHIP program.

Bipartisan stand-alone legislation has been introduced in Congress to change the FMAP formula, but it has not moved forward.  And this issue will not just impact Gulf Coast states, but any state that receives significant federal disaster relief dollars so it’s a national problem. 

With this impending deficit looming over Louisiana, Senator Landrieu included $300 million in the healthcare reform bill so that our most vulnerable populations wouldn’t fall through the cracks in the coming years.  This was not to fund a pet project, but to keep our state budget solvent so that critical health and human services would not be cut.  Our state’s inability to afford offering Medicaid to the same number of citizens because of less federal funding will impact thousands of women and their children. 

I hope everyone will think differently about the “Louisiana Purchase” and realize this was for the health and well-being of my state, not to showcase a backroom deal.

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2 Responses to “Debunking the So-Called “Louisiana Purchase””

  1. FASCINATING. Thanks for this explanation. That is amazing math.

  2. Chris said

    The real Louisiana Purchase was WAY cheaper. 🙂

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