Moody’s notes ‘negative’ potential of Louisiana’s Medicaid cuts

A leading bond ratings agency has taken note of Louisiana’s loss of as much as $859 million in Medicaid financing, calling the budget hit a “credit negative” for the state. As The Times-Picayune reports, the notation from Moody’s Investors Service does not yet affect the state government bond rating—currently high investment grade and stable—but denotes for investors a significant change in the state’s balance sheet. The agency issued the notation before the state unveiled $551 million in spending cuts to the Medicaid insurance program that provides coverage to about 1.2 million Louisiana residents, most of them children. The cuts include $193 million in state general fund reductions, with the balance accounted for by lost federal matching money. Michael DiResto, a spokesman for the Louisiana Division of Administration, says Gov. Bobby Jindal believes state finances, including its debt scores, are on firm ground. “As we have in the past, we are acting swiftly to respond to a loss in revenue, which the credit rating agencies have repeatedly counted as a positive factor in our recent credit rating upgrades,” DiResto said, referring to upgrades since Jindal took office in 2008. “Just as we have always done, we will continue to have a balanced budget that doesn’t raise taxes and protects critical services.” The full story is available here.