“Louisiana Purchase” was a necessary Medicaid fix, but media say it's “corrupt”

Media outlets are listing Sen. Mary Landrieu's (D-LA) efforts to insert funding for Louisiana in the Senate health care bill -- dubbed the “Louisiana Purchase” by conservatives -- as an example of Democrats' “corrupt” practices. But the funds are urgently needed to fix the state's Medicaid problems, which are a result of Hurricane Katrina; moreover, many of the state's Republican lawmakers say the fix is necessary, despite criticizing Landrieu for securing it in the bill.

AP, IBD, Fox News list “Louisiana Purchase” as an example of corruption

AP: Democrats' “rash of ethical lapses” includes “Louisiana Purchase.” The Associated Press, in an article titled, “Democrats mired in swamp they vowed to drain,” reported on a “rash of ethics lapses” from Democrats and listed Landrieu's deal as one of them:

A rash of ethics lapses has given Democrats an election-year headache: how to convince skeptical voters that they're any cleaner than Republicans they accused of fostering a “culture of corruption” in 2006.


Then there's the perception of payoffs to states represented by senators who hesitated on supporting the Senate's health care bill, part of the overhaul that Obama had named his top legislative priority.

Dubbed the “Cornhusker kickback” and the “Louisiana purchase,” the deals with Democratic Sens. Ben Nelson of Nebraska and Mary Landrieu of Louisiana drew derision for the perception of sneakiness they created.

IBD: Landrieu deal is example of “corruption.” In a March 4 editorial titled, “The Corruptocrats,” Investor's Business Daily wrote, “There's a 900-pound elephant in the room in Washington named Corruption. The media don't seem to have noticed it's there -- because the pachyderm is actually a donkey.” As an example of a Democratic “scandal,” the editorial listed the " 'Louisiana Purchase' of $300 million in exclusive Medicaid funds for Louisiana to buy the support of a swing voter, Sen. Mary Landrieu, for health reform."

Cavuto hosts Bachmann to link “Louisiana Purchase” to Matheson smear. On Fox News' Your World, Neil Cavuto hosted Rep. Michele Bachmann (R-MN) to discuss her demand for an investigation over baseless claims that the White House was “selling” judgeships in exchange for a health care vote. During the segment, Bachmann said, “An independent investigation is timely and makes sense, because every aspect of the health care bill has been negotiated behind closed doors, whether it's the substance of the bill or whether it's been a certain amount of what you might call vote buying, whether it's the 'Cornhusker Kickback,' 'Louisiana Purchase,' the union loophole.”

Matthews: Louisiana Purchase has been “exposed as corrupt.” On the March 1 edition of MSNBC's Hardball, host Chris Matthews said Democrats are “going to get rid” of the Louisiana deal because it's been “exposed as corrupt.”

CNN contributor Bennett tied “Louisiana Purchase” to corruption. After noting instances of Republican corruption in the past, CNN contributor William Bennett said during the March 3 edition of CNN's Anderson Cooper 360, “Now you're looking at Rangel, and you're looking at Paterson. You're looking at a government that people distrust. You're looking at this Tea Party thing going on. And with the 'Cornhusker Kickback,' 'Louisiana Purchase,' and other indices, and then you pass this thing, over the express wishes of the American people, I think it is a political disaster.”

But the deal was reportedly a necessary fix to a Katrina-caused Medicaid problem

Times-Picayune: Temporary post-Katrina spending “spiked” per capita income “long enough” to skew Medicaid funding formula, causing state Medicaid funding shortfall. The Times-Picayune reported on January 22 that “Landrieu secured a provision, which she priced at $300 million, to fix the Federal Medical Assistance Percentage for Louisiana. That was called 'the Louisiana Purchase,' though Landrieu insisted the measure was right on the merits, germane to the bill, and did not buy her vote.” The article explained that the “FMAP refers to the percentage of a state's payments under Medicaid that are covered by the federal government. Louisiana usually gets a higher match because of how poor the state is, but because of all the recovery and rebuilding money that poured in after Hurricanes Katrina and Rita, state per capita income spiked long enough to throw the formula out of kilter and threaten to blow a hole [in] the state budget. Landrieu's fix was, according to state officials, only the beginning of a solution for a huge Medicaid shortfall the state is facing.” The article stated that Landrieu said “attaching the Medicaid provision to a health-care bill made sense, and there is no obvious and feasible legislative alternative.”

Jindal: “If not corrected in Washington, D.C.,” FMAP problem will cost $500 million a year. Louisiana Republican Gov. Bobby Jindal's fiscal year 2010-2011 budget proposal says that the “Louisiana state government faces significant, multi-year budget challenges, compounded by a faulty federal FMAP formula that, if not corrected in Washington, D.C., will cost the state approximately $500 million a year in Medicaid funding, impacting services for the poorest in our state, and often those who need care the most.” The proposal also says that "[w]hile there is discussion in Washington about extending the enhanced federal Medicaid match rate for six months for all states, without a permanent fix to Louisiana's faulty FMAP calculation, combined with the loss of federal stimulus funding, Louisiana will still face a projected $1.7 billion shortfall for FY 12."

Lousiana state Health secretary had requested federal exemption to Medicaid financing formula because state's three-year per capita average “does not accurately reflect the financial status” of Louisiana. According to an April 10, 2009, Times-Picayune article, “State Health Secretary Alan Levine has asked the federal government to exempt Louisiana from a Medicaid financing formula that Gov. Bobby Jindal's administration says will force the state to make draconian cuts in health care services for the poor.” The article reported: “At issue is how much Medicaid money the federal government allocates to Louisiana for each dollar the state spends from its own purse, with the ratio influenced by the three-year average of each state's per-capita income. In short, wealthier states have to spend more of their own money.” According to the article, “Levine maintains that the three-year average, designed to account for temporary anomalies in a state's economy, does not accurately reflect the financial status in a state where everything from post-hurricane spending, higher labor costs, private insurance payouts and federal grants to individuals temporarily swelled personal incomes.” Therefore, according to Levine, by January 2011, “Louisiana would have to begin absorbing the equivalent of a $700 million annual loss. He said state revenue projections make it impossible to assume that the state can make up the difference to maintain services at the current level for more than 1 million people.” The article added:

The political irony to Levine's request is that it hinges on federal sympathy for the argument that Louisiana is being hurt by the billions of dollars the U.S. government has directed to the state since the 2005 hurricanes.

In his letter to Johnson, Levine called the changes in Louisiana's Medicaid match rates “an unintended consequence of the bold financial initiatives undertaken since 2005.” Levine did say that the “billions ... infused into Louisiana's economy following the damage caused by the failure of the federal levee system” are “dollars for which we are grateful.”

LA Republicans, including Jindal, support the fix but criticized Landrieu after she obtained it

Jindal staff urged Louisiana delegation to “solve” FMAP crisis. The Hill reported on February 4 that Landrieu said “she attached it to the healthcare bill” at Jindal's “request” and provided a September 2009 email from Julia Kenny, chief of staff for the Louisiana Department of Health and Hospitals, in which “Kenny urges the delegation to 'make our case' for an effort similar to one undertaken by Senate Majority Leader Harry Reid (D-Nev.) to secure Medicaid funds for Nevada.” According to The Hill, the email also said:

“We will be working on a joint statement with Gov. Jindal and [HHS] Secretary [Kathleen] Sebelius to say they are working on the FMAP issue and asking Congress to solve it,” Kenny wrote. “That's huge, if the commitment does lead to follow-through. Once there is agreement, then we will draft a statement for the delegation's consideration applauding the secretary and administration for recognizing the problem and working with Congress to solve it. Thank you.”

The article also noted that Jindal issued a statement in response, saying in part, “I'm against the health care bill and always have been. You would have to live in a cave not to know that. I opposed it even with the FMAP language in it. I am glad the health care bill is dead.”

The Associated Press itself reported that Jindal pushed for obtaining funds. The AP reported on February 5 that Jindal “was among those joining Landrieu in pushing for more money,” but that “since then he's avoided most opportunities to defend her.” From the AP article (accessed via Nexis):

In the wake of Hurricane Katrina, Louisiana stood to lose federal reimbursements for Medicaid, the federal-state health insurance program for the poor, because the state's post-hurricane economic surge temporarily boosted per-capita income that's used to measure Medicaid payments. Louisiana's Republican governor, Bobby Jindal, was among those joining Landrieu in pushing for more money but since then he's avoided most opportunities to defend her.

At a news conference in Baton Rouge, La., Jindal defended the need for the changes to the Medicaid formula, but said he opposed the Senate health care bill, even with the money included.

Asked whether Landrieu was wrong to put the money in the Senate bill, Jindal didn't respond directly and instead said, “I'm not a member of Congress. I'm not going to tell them what bills to draft and what bills to amend.”

Times-Picayune noted that Jindal had “pushed” Landrieu to get funding, but did not defend her amid criticism. The Times-Picayune reported on February 4 that the “Jindal administration had pressed the congressional delegation last year to try to remedy the problem and, as the hour grew late, state Secretary of Health and Hospitals Alan Levine looked to Landrieu as the member of the delegation with the most clout to get it done.” The article also reported that Jindal did not “defend [Landrieu's] decision to include the 'FMAP fix' in the Senate health overhaul bill,” and “said he would have opposed the Senate bill with or without the measure.” The article said Jindal had only issued “a single statement to CNN on Nov. 20 in which he said, 'the (health care) bill is awful, but it's unfair to criticize Sen. Landrieu or the rest of our delegation for fighting to correct this.' ”

Other LA Republicans also say the funds are necessary, despite criticizing Landrieu for securing them. The Times-Picayune also quoted several Louisiana Republicans, including Sen. David Vitter, Rep. John Fleming, Rep. Charles Boustany, and Rep. Steve Scalise, in a January 22 article as saying fixing FMAP is “legitimate and necessary,” but criticized Landrieu for securing it in the health care bill. The article also quoted Rep. Charlie Melancon (D-LA) as saying Landrieu “did what she was asked to do and then the governor didn't step up, Vitter criticized her, she was chastised by talk radio shows because she did what her governor asked her to do, it doesn't put a penny in her pocket.”