Programs for medically vulnerable children, seniors and people with disabilities could be eliminated next year as a result of Louisiana’s looming budget deficit, officials with Gov. Jeff Landry’s administration said Friday.

Louisiana Health Secretary Michael Harrington laid out services he might be forced to cut if the governor and lawmakers reduce the state health care budget by $105.1 million to deal with a financial gap in the next fiscal year. He’s been told to expect a large cut as the state tries to figure out how it will cope with an automatic tax reductions scheduled for mid-2025. 

Harrington said that $105.1 million cut to state health care services would balloon to an overall loss of $332.4 million with resulting federal funding reductions. The state would no longer be able to put up the money needed to draw down more dollars from the federal government for health care services. 

Given the size of the cut the state health department anticipates, Harrington said there are few options for absorbing the budget reduction that don’t involve eliminating programs considered crucial for seniors, children or people with disabilities.

“Any of these kinds of cuts is going to naturally impact the most vulnerable,” Harrington said at a Louisiana House budget hearing Friday. “That’s what we [the health department] do. We take care of seniors and children.”

More than 90% of Louisiana’s $19.9 billion health care budget is spent on Medicaid programs, which pays for health care for people who are pregnant, low-income or disabled, according to Harrington. The bulk of that money, 71%, comes from the federal government, but the state is required to contribute funds in order to receive the federal support. 

If forced to make a $105.1 million reduction, Harrington said the Landry administration would eliminate pediatric day care centers ($26.4 million) for families with medically fragile children. Money for a program that helps children with behavioral challenges, called the coordinated system of care, would also be reduced by $5.9 million.

The state would also scrap its Program for All Inclusive Care for the Elderly ($20.4 million), known as PACE, that assists older people so they can continue to live at home instead of going into nursing homes. Money for daytime supervision for seniors and adults with disabilities who cannot take care of themselves would also be lost ($9.1 million).

Transportation reimbursements for people with disabilities would also be scrapped ($1.8 million). Funding for medical residents who train to be doctors in Louisiana would also be reduced ($23.1 million). 

Caregivers who help adults with disabilities and intellectual challenges would also see their reimbursement rates lowered again. Most of these rates have only been raised in the past couple of years after program directors long complained they weren’t able to hire staff at the low wages the state previously provided. 

The state budget deficit plan also calls for reducing supplemental payments to hospitals for treating Medicaid patients by $69.4 million and eliminating an expected increase in funding for nursing homes that would have cost $67.8 million.

Republicans and Democratic lawmakers on the House Appropriations Committee said they would be unwilling to make such cuts.

Rep. Jason Hughes, D-New Orleans, described the plan as inhumane, and Rep. Larry Bagley, R-Stonewall, said families would be unable to care for their loved ones without these programs.

“These are people that depend on us for their life,” Bagley said.

Other legislators questioned whether health officials under Landry, a Republican, had looked deep enough at its nearly $20 billion budget to find alternative ways to save money. Many of the programs put on the chopping block were also proposed for elimination when Landry’s predecessor, Democratic Gov. John Bel Edwards, faced a budget deficit eight years ago.

Rep. Tony Bacala, R-Prairieville, said the health department has never fully accounted for the hundreds of thousands of people removed from Medicaid following the height of the COVID-19 pandemic. Given that the program has significantly fewer people in it, the health agency should have some spare money in its budget that could be used to keep these programs whole, he said.

Bacala also alleged the health department ended fiscal year 2023-24 in June with $75 million in leftover state funding, which means some of that money should be available to cover the $105.1 million cut.

“You continue to say we need more money to cover 300,000 less people [in the Medicaid program],” Bacala said.

Louisiana is facing a budget deficit of $587 million next year largely because of a planned cut to the state sales tax from 4.45% to 4%. State lawmakers could avoid major budget reductions if they voted to keep the sales tax rate at the current level, but legislative leaders have said the conservative anti-tax Louisiana House of Representatives is unlikely to do so.

Lawmakers are more likely to look at expanding the sales tax to new items and services as well as eliminating other tax exemptions to make up some of the revenue. Louisiana Revenue Secretary Richard Nelson has proposed a tax on streaming services such as Netflix as well as services like auto detailing for the first time.

If the Legislature chooses to keep a 2% tax on business utilities that is supposed to expire July 1, 2025, it would also generate $220 million and lessen the deficit. Moving $320 million the state generates through a vehicle sales tax from transportation projects into health care services, higher education and other programs could also help close the budget gap.