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Medicaid also provides funding for the Disproportionate Share Hospital (DSH) program, which reimburses hospitals that treat large numbers of low-income uninsured patients.  States receive annual DSH allotments from the federal government but are required to spend their own funds to access the federal pot.  State officials choose which hospitals qualify for the DSH program and how much money to provide each facility. In 2004-2005, Louisiana spent over $854 million in Medicaid funds on DSH, a remarkable 17% of the state’s total Medicaid spending.  Other states spend an average of 6%.  Louisiana funneled DSH dollars to the hospitals administered by Louisiana State University’s Health Care Services Division (LSU HCSD).  Sixty-one percent of the state’s DSH dollars—$526 million—was sent to LSU HCSD. Its flagship Charity Hospital in downtown New Orleans relied on those DSH funds to maintain operations.  Statewide, private hospitals received $63 million.   

This funding dichotomy created New Orleans’ “unique” or “two-tiered” health care system.  Charity Hospital absorbed the poor, minority, and uninsured populations, offering important services like Level One trauma care and housing the lion’s share of inpatient mental health beds.  Over half of Charity’s inpatient care was delivered to the uninsured, compared to 4% at other New Orleans hospitals.  This structure favored hospitals and discouraged the development of community-based outpatient care. As a result, uninsured patients had to seek even routine care in the emergency room of Charity Hospital. 

During Hurricane Katrina, the flooding at Charity Hospital was enormous.  Because of a federal law called the Stafford Act, FEMA could only pay to restore the hospital to its pre-storm condition.  The facilities were in need of drastic repair even before the storm—accrediting authorities had previously threatened to shut down facilities and an engineering firm hired by the state declared it unsalvageable.  After reviewing damage assessments and repair estimates, administrators decided not to reopen Charity, a hotly debated decision in New Orleans.  Given the hospital-heavy bend of the pre-Katrina system, the loss of Charity’s services, especially in mental health, left the city’s uninsured without a health system at all.

Mental illness has emerged as a burning issue in post-Katrina New Orleans; much of the media falls on the scrapes and bruises—non-acute mental illness symptoms related to the storm.  However, the patients with severe and chronic mental illnesses, who are often uninsured, reveal the more sinister gaps in the administration.  Their interactions with the system illumine the challenges of recognizing, treating and paying for mental health care in Louisiana’s institution-based health care system.

The members of New Orleans Police Department’s Crisis Transportation Service (CTS) are the frontline providers for the mentally ill. With Charity gone, they can see the difference in the lives of their clients and it is not good.   The group works day and night, traversing the streets of New Orleans in their van until the radio blares, “103M”—Combative Disturbance Mental Health. In the best cases, it is CTS’s job to relieve the police officers at the scene of a disturbance and offer the emergency counseling for the patients.  In the worst cases, they are charged with subduing psychotic patients and delivering them to over-crowded emergency rooms where, according to Jim Arey, a police negotiator, they may wait for hours or even days for discharge or their next placement. 

Before the storm, the Crisis Intervention Unit, a specialized psych crisis facility at Charity was CTS’ usual destination.  Now, Jeff Wellborn, an administrator of CTS, and Mike, a volunteer, take their patients to private hospitals, many of which are in neighboring Jefferson Parish. Sometimes, the patients pile up. “We need more beds,” says Wellborn.  “If you’ve got mental and physical competing for the same beds, who do you expect can pay?”   

Mike, who became involved with CTS after learning to care for a relative with mental illness, now spends about 4 nights a week on this beat.  He says that although the number of calls he responds to remain at the same level as before the disaster (even with the smaller population), their resolution rate—the percentage of patients that they do not take to the emergency room—has risen from about 8% to 28%.  He says that this increase is not because the patients are less troubled.  “We just have nowhere to take them.” With Charity gone, these troubled New Orleanians are left on the street. 

One rainy night in December, CTS picked up a 24-year-old female under the bridge linking New Orleans to its West Bank suburbs.  After four officers struggled to subdue the woman, CTS restrained her and took her to West Jefferson’s ER, where she was quickly admitted to an emergency room bed.  “That one was easy,” said Wellborn, who has grown accustomed to far longer waits.