Louisiana health department could be out $700 million; here’s what’s on the chopping block

Sen. Fred Mills at a hearing
Sen. Fred Mills, R-Parks, stands after a June 20, 2023, Senate Committee on Health and Welfare on the $100 million cut to the Louisiana Department of Health. Photo by Claire Sullivan

This story was first reported by Louisiana Illuminator and republished with permission.

Louisiana’s health secretary told lawmakers his department could be out $700 million because of a cut made in the final moments of the legislative session, when many lawmakers voted on the budget after having only minutes to read it.

Stephen Russo, secretary of the Louisiana Department of Health, appeared Tuesday at a Senate Health and Welfare Committee meeting that was scheduled after lawmakers cut $100 million cut to state health services. The Senate Finance Committee also held a scheduled meeting Tuesday, where the health department cutbacks were also discussed.

The reduction could multiply several times over because of federal match dollars Louisiana draws down, Russo said. That could mean hundreds of millions of dollars cut from mental health, children’s services, elder care, surgical centers, mobile cancer screenings, physician training and more.

The cuts to services could create costly strains for emergency services and impact the most vulnerable residents of the state, according to the secretary.

Russo said he thought it was a “joke” when he got a call around 5:35 p.m. June 8 — the final day of the legislative session — that his department would see a $100 million cut. Many lawmakers were caught off guard, as was Gov. John Bel Edwards.

“There was no heads up. Period,” Edwards said shortly after the Legislature adjourned at 6 p.m. June 8.

Lawmakers entered the session with a $2.2 billion surplus, but now they’re having conversations reminiscent of those that took place when the state was in financial straits eight years ago.

Senate Finance chairman Sen. Bodi White, R-Central, said he wished he hadn’t signed the conference report on the budget and that lawmakers had gone into a special session instead.

“I pray that the governor vetoes this,” White said, adding, “We did some things that should have never been done.”

Sen. Sharon Hewitt, R-Slidell, who isn’t on the Health and Welfare Committee but sat among members Tuesday, casted doubt that the $100 million cut will have a large impact on the $20 billion department. “You’re talking about less than half a percent,” she said.

“I don’t believe we are accurate enough in our ability to forecast to be wringing our hands over $100 million,” Hewitt said.

The health secretary disagreed, and so did some of Hewitt’s fellow lawmakers.

“You’re really talking about just fundamentally devastating the Medicaid program, and it’s just not a chance that I think we can take,” said Russo, whose department has spent almost two weeks since the Legislature adjourned taking stock of what they might have to cut.

“Close a couple of hospitals, shut down some nursing homes and let’s see how big that is,” Sen. Gerald Boudreaux, D-Lafayette. said.

The cuts would affect not just tens of thousands of patients, but also hundreds of health care providers. Some may have no choice but to find jobs elsewhere, health officials said.

“You will certainly lose the (certified nursing assistants) and the nurses if they don’t get paid by the nursing homes at the level that other states can pay them and the private sector can pay them,” Russo said.

Sen. Jay Luneau, D-Alexandria, pointed out the legislature approved millions of dollars of tax exemptions this session and suggested some of that money be directed to the health department.

“We want to help the companies do everything they can. But at the same time, aren’t we supposed to be representing our constituents who are the people out there who are going to suffer because of this?” Luneau said. “What about the people that would lose their job? Do we not give a damn about them?”

Three legislators sitting at a committee hearing
Sens. Gary Carter, Gerald Boudreaux and Fred Mills sit during a June 20, 2023, Senate Committee on Health and Welfare meeting on the $100 million cut to the Louisiana Department of Health. Photo by Claire Sullivan

The health department put together a list of what might be impacted if the $100 million reduction remains in place.

The largest loss was $31.3 million for community behavioral health services, which could total a reduction of $414.8 million with federal funding considered.

“This reduction includes all outpatient, community-based and residential mental health and substance abuse … services covered under Medicaid for children and adults,” the handout reads. That includes access to licensed mental health professionals, mental health rehab services, crisis services and psychiatric residential services for youth.

“These are not games,” Boudreaux said. “People in this state will die.”

The reduction would impact tens of thousands of patients. Last year, 31,000 Louisiana Medicaid recipients received outpatient or residential substance abuse services, and 180,000 received mental health services, according to the handout. 250 and 2,200 providers for those services, respectively, would also be impacted by cuts.

There could also be a total of $131.2 million lost from reimbursements to private hospitals that provide services to patients on Medicaid or without insurance. The hospitals are Our Lady of Angels in Bogalusa, University Medical Center New Orleans and Ochsner University Hospitals & Clinics in Lafayette.

Other cuts laid out by LDH, all described in the total amount that could be lost with federal matching dollars taken into account, include:

  • $118 million for rebasing of rates for nursing homes
  • $42 million for clinic services
  • $28 million total for Pediatric Day Healthcare Center
  • $23 million total for in-patient graduate medical education
  • $7.7 million total for ambulatory surgical centers, which impacts 22,710 recipients
  • $14 million for those with severe behavioral health issues
  • $5.2 million for the Program of All-Inclusive Care for the Elderly, which operates on a 24-hour basis to provide acute and long-term care for the elderly, serving 600 people
  • $1 million for transition beds to safely discharge people with mental illnesses
  • $250,000 for mobile cancer screenings, which provides screening for those who are underinsured or uninsured
  • $12.4 million for physical and occupational therapy for adults, which impacts 13,001 recipients

Lawmakers agreed Tuesday they never wanted to repeat the chaotic passage of the budget that has left them with unpleasant surprises.

“This was chaos and confusion, and it was an embarrassment to the state,” said Sen. Heather Cloud, R-Turkey Creek, in a meeting of the Senate Committee on Finance.

The fate of the budget lies with Gov. Edwards, who has expressed frustration with the last-minute cut. The question that remains is how, exactly, he would do that because he would likely have to draw money from other parts of the budget.

The Senate Health and Welfare Committee agreed to send the governor a letter expressing their opposition to the health cuts.

“We know the heart of this governor,” said Sen. Fred Mills, R-Parks, chairman of the committee. “And I think the governor is going to do everything he can within his power to make sure that what we talked about today doesn’t happen.”