In an editorial this morning, The Advocate takes an in-depth look at the state’s challenge in confronting the growing costs of providing health care for the poor.  Key graphs:

Jindal laid out the data before the Press Club of Baton Rouge. Medicaid costs are expected to be more than 20 percent of the state’s general fund in the coming year.

As Jindal noted, one of the reasons for that increase — doubling as a percentage of the general fund in five years — is that rate increases were provided for doctors and nurses, hospitals and nursing homes. Even with sharp budget cuts proposed by Jindal’s administration, he noted that the state still will be spending more on health care for the poor than in 2007. Lobbyists for the health-care providers were very active, and the state was relatively well-off because of hurricane-related revenue and high oil and gas prices.

This year is a problem for Jindal and the Legislature. But the real cliff for Medicaid comes when the U.S. government — which typically pays 70 percent of Medicaid’s costs in Louisiana — changes its reimbursement rate. An obscure formula will change twice over the next two fiscal years, reducing reimbursement to about 63 percent. A small change in percentage but a huge difference, about $700 million a year in state funds.

Medicaid cost increases are a key component in the multi-year budget problems in store for the state (even with the spending reductions proposed for the upcoming fiscal year, the state is facing a projected $1.9 billion budget shortfall just two years later in FY 12).  They are also a major reason for the need to reform and streamline government to bring spending levels to a sustainable level.