Loren Scott Says Bobby Jindal Saved The State $2.7 Billion By Privatizing The Charity Hospitals

We were never huge fans of the previous governor’s budgetary practices. He inherited a bad practice from his predecessor Kathleen Blanco of using temporary money on ongoing expenses – Blanco was in office when Louisiana was deluged by Katrina recovery money, and rather than spending that on things like infrastructure and endowments for state colleges, etc., she just pumped it into the general fund – and continued it to a large extent.

All of which we’ve discussed over and over. But Bobby Jindal deserves some credit for at least one major, lasting reform without which Louisiana’s fisc would be well and truly screwed. Namely, that Jindal privatized most of the state’s charity hospitals – the antiquated bastions of Huey Long-style socialized medicine which were bleeding Louisiana dry and were especially problematic upon the passage of Obamacare.

You don’t have to believe us on that score. LSU economist Loren Scott, who knows about these things, outlined all this yesterday at the Baton Rouge Press Club.

A study commissioned by Louisiana’s private indigent care partners shows that former Gov. Bobby Jindal’s decision to privatize the state’s health care system for the poor has resulted in savings for the state budget.

Conservative economist Loren Scott said at the Press Club of Baton Rouge’s weekly meeting today that partly privatizing the state-run charity hospitals saved Louisiana more than $850 million last year, though Scott acknowledged roughly $50 million of capital improvements included in that number may have happened regardless.

Louisiana has saved an estimated $2.7 billion since the privatization began in 2013, Scott says. “This transition caused a lot of new money to come into the state,” he said.

The savings, Scott said, came primarily from the state leasing the facilities it previously owned under the defunct charity system to the nine private partners that provide indigent care, including Our Lady of the Lake Regional Medical Center in Baton Rouge. That move alone generated $525 million last year, the study said.

Scott’s economic consulting firm conducted the study on behalf of the Alliance of Public Private Partnership Hospitals, a group that represents the nine private partners. The alliance says it commissioned the study to tout the privatization deal’s economic benefits.

Edwards’ administration last year renegotiated the state’s contracts with the private partners in an attempt to save money. Those dealings included an agreement to bring a new emergency room to north Baton Rouge, which has lacked emergency care since Earl K. Long charity hospital closed in 2013 and Baton Rouge General’s Mid City ER shut down in 2015.

Now, is this a completely objective study? It was commissioned by the private companies now running those hospitals, so no. But there is no question privatizing those hospitals has been a winner, just like there was no question it would be before Jindal did it. The issue wasn’t that jumping those hospitals out of the state’s budget would be good policy – everybody knew their models were unsustainable. The issue was whether there would be the political will to do it.

And as it turned out, there wasn’t. Ideally the thing to have done would have been to pass a bill at the legislature and bring everyone aboard with a privatization plan so Jindal would have had lots of allies to defend it. But that was never going to happen, and so Jindal pulled the trigger on the privatization as an answer to a mid-year budget deficit. He then spent the rest of his term getting pounded across the political board for all the hiccups and bumps along the way.

And the state’s media hammered away at him every time numbers came in which showed the state was saving less money with the privatization than was initially projected. Mind you, these numbers never showed that Louisiana wasn’t saving money – Jindal’s privatization was a bad idea because it didn’t save as much as the projections indicated. That’s the level of honesty we got from the Advocate and the Times-Picayune.

And meanwhile Scott’s numbers show the privatized charity hospitals generated $850 million in savings for the state budget last year. Think about how bad things would have been last year if Louisiana had been $850 million more in the red.

Maybe it’s time to start appreciating Jindal a little more than we’ve done. After all, for all the screaming about this man’s having “destroyed” Louisiana, didn’t Jindal always seem to find money to fund TOPS? What happened to that program as soon as Jindal was gone?

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