Jindal administration draining elderly trust fund

Jindal administration draining elderly trust fund, raising worries about looming budget cliff

Associated Press

BATON ROUGE, La. (AP) -- To cope with budget troubles, Louisiana Gov. Bobby Jindal's administration has steadily depleted a trust fund for elderly services created with an infusion of federal cash a decade ago.

When Jindal took office, the Medicaid Trust Fund for the Elderly contained more than $830 million. Now, the balance has been cut in half to $410 million, according to the treasurer's office.

By the end of the current fiscal year, it is projected to sink to $250 million or less.

Officials involved with creating the fund expected the state to leave the principal intact and mainly use the interest and investment earnings, so the trust fund would provide a stream of funding for decades to pay for nursing home care and other health care services.

Instead, the Jindal administration — with approval from lawmakers through the budget process — keeps dipping into the principal to plug health care budget gaps and finance Medicaid services at nursing homes.

At the current rate, the money could run dry by the end of Jindal's current term, leaving his successor with a hefty health care financing gap.

"I was surprised and disappointed to learn that this trust fund had been depleted to its current level," said Secretary of State Tom Schedler, a Republican who sponsored the legislation creating the elderly trust fund in 2000 when he was a state senator.

"The loser is, of course, the taxpayer of Louisiana and most certainly the frail and elderly senior citizens for which it was intended to serve," he said this week.

One $122 million payment from the trust fund was tied to a federal determination that the state received too much money when it built up the fund.

The rest has been used to stop cuts to the rates paid to private nursing homes for caring for Medicaid patients, said Department of Health and Hospitals Undersecretary Jerry Phillips.

"We continue to use the trust fund as a way to maintain those nursing home services, because nursing homes are one of those services that are core to the Medicaid program," he said.

To get into the elderly trust fund, DHH assigned cuts to nursing homes, which triggers the ability to use the principal to "rebase" nursing home payments to cover their costs. It also has been used to increase nursing home rates in the Medicaid program.

In the budget year that began July 1, nursing homes are estimated to receive $893 million in state and federal Medicaid payments. Of that, $184 million is slated to come from the elderly trust fund, used to draw down about $500 million in federal matching money, Phillips said.

Three-quarters of the Medicaid spending on 29,000 nursing home residents is tied to use of the declining trust fund.

"It's analogous to paying your household bills out of your savings account after you've stopped working and you don't have any income," said Jan Moller, director of the Louisiana Budget Project, an organization that has raised concerns about the use of the trust fund.

Lawmakers have been warned the fund was dwindling, but have done nothing to stop it or to plan for the looming financial cliff they face when the primary payment source for nursing home care disappears.

Phillips said DHH and the Louisiana Nursing Home Association are discussing possible ways to tap into new federal Medicaid dollars and shrink the use of the elderly trust fund to pay for nursing home care.

Creation of the trust fund involved intense negotiations with the Clinton administration, which was working to close a loophole in federal Medicaid financing.

Louisiana was the last state to get in on the loophole, and only after Gov. Mike Foster's administration made promises about how the money would be used. David Hood, DHH secretary during the Foster administration, said he didn't envision the trust fund principal to be spent on regular payments to nursing homes.

"I was kind of taken aback a couple of years ago when I realized they were raiding the principal," Hood said.

Phillips said Louisiana has faced extraordinary events that weren't anticipated when the trust fund was put in place, including a steep drop in its federal Medicaid funding rate.

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