400 suggestions: Treasurer John Kennedy\’s Thursday night fraud

Screenshot 2016-02-12 09.01.28By Robert Mann

Does anyone know how state Treasurer John Kennedy got on our TV screens on Thursday night to deliver the official Republican response to Gov. John Bel Edwards\’ statewide message on the state\’s fiscal crisis? I\’m told by Republican sources in the Legislature that Kennedy wasn\’t tapped by House leaders. In fact, some House Republicans were apparently quite displeased that Kennedy hijacked their message and purported to speak for them.

Whatever Kennedy said to persuade the state\’s TV stations to give him airtime, the Republican candidate for U.S. Senate clearly did not promise them a specific plan to counter Edwards\’ proposal to raise various taxes and cut spending where possible to address the state\’s fiscal crisis. Kennedy, instead, delivered a demagogic campaign speech, short on details but long on folksy rhetoric and thinly veiled dog whistles aimed at vilifying poor.

“We need to start saying no, as the law allows us to, to our friends on Medicaid who go to emergency rooms – expensive emergency rooms – to be treated for things like acne, to get a pregnancy test, to have a wart removed, to talk to someone about losing weight, to see if they need glasses,” Kennedy said. “It costs five times as much to treat them in an ER than it does in a private clinic.”

Kennedy was counting on his viewers knowing virtually nothing about the state\’s budget process (in other words, that lawmakers have three weeks to find more than $900 million in revenue or savings for the current fiscal year).

Rather, he seemed to rely on his viewers\’ predisposition to believe that millions of shiftless poor people are robbing them blind by seeking treatment for warts in emergency rooms.

Kennedy\’s speech, in other words, wasn\’t about budgeting. It was about fomenting resentment against the poor.

The thrust of Kennedy\’s message was that the state doesn\’t need a new dime in revenue – in other words, that this fiscal year\’s $900 million shortfall and next year\’s $2 billion shortfall can be eliminated by budget cuts alone.

“Basically, what the governor is saying,” Kennedy said, “he\’s telling Louisiana families and Louisiana businesses that they have to cut their budgets so that Louisiana state government doesn\’t have to cut its budget.”

To bolster his claim that budget cuts can do the trick, Kennedy said he had “sent the governor and each legislator over 400 different ideas and suggestions about how they an reduce spending without hurting anyone.”

On Friday, I asked Kennedy\’s office to share that list of 400 ideas. Here is what I received:

Screenshot 2016-02-12 13.20.57

That\’s right, Kennedy\’s brief letter merely provided hyperlinks to a series of reports, one of which was more than 20 years old. Another was dated March 20, 2001. The most recent report in Kennedy\’s letter was from 2010. (And, by the way, he apparently did not send the list to every member of the Legislature, as he claimed; he just cc\’d “Louisiana State Legislature” at the bottom of his brief letter.)

Contrary to what Kennedy implied in his speech on Thursday night, these were not 400 ideas that he had developed. They were, instead, just a dusty compilation of the work of others.

“I guess I shouldn\’t be shocked, but it\’s extremely disappointing that someone who knows better should use 20-year-old recommendations to make the case for budget cuts,” Jan Moller, who heads the Louisiana Budget Project, told me. “John Kennedy was a top aide to Buddy Roemer the last time Louisiana faced a similar budget crisis. He, more than most, should understand that our current problems won\’t be solved without new revenues. The fact that Kennedy uses data from the Edwin Edwards administration to make the case for more cuts only provides more evidence that John Bel Edwards is right.”

It\’s also worth noting that most of the recommendations in these reports (suggestions for various budget and managerial reforms) were accepted and made by previous administrations. The reports contain most of the low-hanging fruit — and it\’s been picked. That\’s another reason Kennedy\’s lazy recycling is so disappointing.

While Kennedy has built a reputation as a straight shooter firmly in command of the state\’s fiscal matters, what stood out to me, beyond his shameless fear mongering, was that he missed his chance to present a detailed plan for the kind of budget cuts he demands.

Wouldn\’t you think that a man who claims to have spent the last eight years fighting former Gov. Bobby Jindal\’s reckless fiscal policies might be able to produce a four- or five-page plan that lists all the cuts Gov. Edwards should enact in the place of budget cuts? Kennedy has several web sites at his disposal and, presumably, the email addresses of all the state\’s political reporters. He could share his plan easily with voters. (I wonder why he didn\’t post his pitiful letter to Edwards on his website?)

Could it be that Kennedy did not present a plan on Thursday night for the same reason Republican House leaders refuse to do the same? And the reason?

Such a budget-cutting plan would spark a revolt among their constituents. Instead of offering specifics, Kennedy instead offered viewers resentment against Louisiana residents living in poverty who depend on Medicaid for their health care.

In addition to accusing Medicaid recipients of abusing emergency rooms to obtain routine care, Kennedy made this dubious claim: “According to the Federal Centers for Medicare and Medicaid Services, 10 percent of the $9 billion taxpayer dollars that we spend every year on Medicaid is attributable to fraud. That\’s $900 million a year. Even if CMS is half wrong, that\’s $450 million a year. We need to embed about 15 auditors from the Legislative Auditor\’s Office in DHH, root out the fraud and prosecute the perpetrators to the full extent of the law.”

In other words, just balance the budget by eliminating waste, fraud and abuse.

Moller correctly noted “the fraud issue is an old canard. It exists in Medicaid, as in the rest of the budget, but writing it out on the kind of timetable we\’re talking about is almost impossible and there is no evidence that it\’s more prevalent in Louisiana than anywhere else.”

“Treasurer Kennedy is correct about Medicaid fraud, but he grossly overestimates the possible savings,” Bob Johannessen, press secretary for Louisiana\’s Department of Health and Hospitals, said. “The 10 percent fraud figure that he attributes to CMS includes not only fraud but also waste and abuse. Waste is the overutilization of services or the misuse of resources that directly or indirectly adds unnecessary costs. To suggest that auditors could easily ferret out wasteful health care practices as easily as they can identify fraud is wrong. Nonetheless, fighting fraud is a key initiative of this administration. Over the past eight years, as the former administration downsized government, DHH lost a substantial number of our fraud-fighting staff. We are now working to rebuild this critical function.”

Moller, however, observed “the groups with the most incentive to root out fraud are the private Bayou Health providers that get paid a monthly managed-care fee to treat patients. That\’s the whole point of these reforms – to give the market an incentive to ration care and control costs.”

In his speech, Kennedy argued “we need to embed about 15 auditors from the Louisiana Legislator\’s Office in DHH, root out the fraud and prosecute the perpetrators to the fullest extent of the law.”

“Kennedy leads citizens to believe that money can be recovered quickly with the addition of 15 auditors,” Johannessen responded. “In reality, when the auditors discover possible fraud, their evidence is sent to the Attorney General who then builds the case. Allowing for due process, the resolution of any one case could take years, and there is never a guarantee the guilty party will pay restitution.”

In other words, attacking fraud is a good idea but not if you need to squeeze out a billion dollars in savings in four months\’ time.

As for Kennedy\’s allegations about improper or overuse of the state\’s emergency rooms, Johannessen told me: “[Kennedy] fails to point out that DHH has already adopted the industry best practice of managed care when we introduced the Bayou Health program. By adopting managed care, just like private insurance companies, DHH has taken a critical step to stop the improper use of emergency room care.

“For the high-cost Medicaid users,” he added, “Kennedy suggests that better managing their care will reduce Medicaid spending substantially. He doesn\’t tell you, or he doesn\’t understand, that a majority of this population are seniors in nursing homes, fragile newborn babies or people with disabilities who require long-term care. This is expensive care and the costs are not easily reduced without putting lives at risk.”

But better to issue some meaningless rhetoric about Medicaid “fraud” and improper use of emergency care than offer up a detailed list of reasonable cuts. Developing a detailed plan for balancing the budget with specific cuts only would mean that Republicans would be sharing some of the responsibility for governing the state. That\’s clearly not the role that Kennedy and the most conservative Republican members of the House want to play.

In Kennedy\’s case, he\’s content to try and demagogue his way to the U.S. Senate. But he needs a new foil. Now that Jindal is gone, that will be Edwards.

As for House Republican leaders, they are hoping Edwards is a one-term governor. Sharing responsibility for governing might complicate things when blame is assigned. Better to put it all on Edwards by just saying, like Kennedy, “We don\’t have a revenue problem. We have a spending problem.”

That\’s not true, of course. Louisiana is one of the lowest taxed states in the country, but it rings true because that\’s what people want to hear.

“There is certainly plenty of room for debate about which taxes to raise and by how much,” Moller said. “How much of the burden should fall on business vs. individuals vs. local government? How much should fall on rich families vs. poor families?

“People of goodwill can, should and will disagree on those questions,” he added. “But to pretend that we can get out of this mess without raising revenues is not a serious position to take in February 2016 – and Mr. Kennedy\’s letter to the governor only proves that.”

Filed under: John Bel Edwards, Louisiana Politics, Politics Tagged: budget cuts, Jindal, John Bel Edwards, John Kennedy, Louisiana budget, Louisiana Legislature, Louisiana politics

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