After Hurricane Katrina, there was good reason to believe that a gaping window of opportunity had opened for Louisiana to revamp its safetynet health care system. But two years of discussions among stakeholders within Louisiana and extensive negotiations with federal officials resulted in no such change. This article argues that any explanation for this outcome needs to incorporate both structure and process. In terms of structure, the rules of the Medicaid disproportionate-share hospital (DSH) program give states substantial independent authority to decide which hospitals to fund. Federal authorities could not force Louisiana, which had historically turned its DSH money over to the state hospital system, to redirect it toward an insurance expansion. In the process of negotiation after Katrina, those who defended the institutions wedded to the prestorm status quo conducted a better strategy than their challengers. They narrowed the purview of the Louisiana Health Care Redesign Collaborative, set up to propose changes in the safety net to the federal government, such that the question of whether to rebuild Charity Hospital in New Orleans was off the table. Meanwhile, on a separate track, the state and the Department of Veterans Affairs successfully pursued a plan to jointly build replacement hospitals.

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