The Obama administration has made an offer that it hopes will resolve Florida’s $1 billion state budget stalemate over health care funds for poor people.
Federal health officials agreed to extend Florida’s hospital funds for another two years, but only at about half the amount the state received last year. That means Florida lawmakers may have to dip into the state budget to fill the gap or state hospitals will get less money in the coming year.
In a letter Thursday to Gov. Rick Scott, federal officials stressed that they would not use Low Income Pool hospital funds to cover anyone who could be covered by Medicaid expansion, but they also acknowledged the loss of those funds may be difficult for the state. The current hospital funds are $2.1 billion dollars, put up by the state and federal government. The administration’s preliminary offer drops that to $1 billion for the 2015-2016 fiscal year and to $600 million the following year.
The proposal is still subject to a formal review but federal officials said they wanted to work with the state in good faith, recognizing that the Legislature needs to pass a budget by June 30 to avoid a state government shutdown.
“The decision about whether or not to expand Medicaid is a state option … (R)egardless of whether a state expands Medicaid, uncompensated care pool funding should not pay for costs that would be covered in Medicaid expansion,” federal health officials said in the letter.
The funds, which are part of a federal program that covers the hospital bills of uninsured and Medicaid patients, were supposed to end this year as President Barack Obama’s health care program grew. Patients covered by the low-income pool were supposed to be covered by Medicaid, but the Florida House and Scott have balked at expanding it.
The bitter standoff between the Republican governor and the Obama administration tore apart the state legislative session, with the House abruptly adjourning three days early last month. Scott sued the Obama administration, comparing federal officials to the TV mobster show “The Sopranos” and accusing them of withholding the hospital funds because the state wouldn’t expand Medicaid.
The dispute created a $1 billion hole in the governor’s budget that should now be much easier for lawmakers to address when they return for a special session June 1.
Scott pressed for the extension for months, even visiting Washington twice and blaming the Obama administration for ruining his budget and ignoring his timeline even though he’s known for more than a year that the funds were ending. He waited until mid-April to submit a proposal, although the months-long required public comment period made it impossible to get an answer before the Legislature adjourned last month.
The Obama administration and hospitals want the governor to expand Medicaid to more than 800,000 low-income Floridians and will not spend federal hospital funds on those who would be covered by Medicaid expansion. That’s because federal health officials say it’s more efficient to use the money to give people health insurance than to pay hospitals for caring for the uninsured retroactively.
But Scott and Republican House leaders refuse to accept any money tied to the Affordable Care Act - including Medicaid expansion. They even snubbed a Senate proposal that would eventually take billions of federal dollars and allow the Medicaid expansion recipients to buy private health insurance - a solution that Scott has fought for in the past.
The House and Senate recently announced they would discuss Medicaid expansion during the special session, snubbing the governor’s call to focus only on the budget.
Senate leaders had prepared to move ahead with a health care coverage plan during the upcoming special session, but the announcement from the federal government bolsters the argument of House Republicans who maintained that the state would continue to receive a decent chunk of the hospital money without having to expand Medicaid.
During a recent closed-door session, House and Senate budget chiefs discussed the House’s objections to the Senate’s current proposal. Senate budget chief Tom Lee agreed there were “reasonable” concerns raised about the Senate plan.
Florida Senate President Andy Gardiner sent this memo to senators after receiving a copy of the latter:
This morning we received a copy of a letter from Centers for Medicare and Medicaid Services (CMS) offering preliminary feedback regarding the amount of LIP funding Florida can expect to receive for the 2015-16 fiscal year. The letter is attached for your reference. In summary, CMS has outlined a step back to the traditional (pre-2014) level of LIP funding. This $1 billion in total LIP spending authority represents less than half of the current year authority of $2.2 billion. Additionally, CMS believes allowing this level for the 2015-16 fiscal year will help Florida transition to a base level of $600 million in subsequent years. This news brings certainty to what we have known for over a year – the LIP program is changing and Florida needs a new way to address uncompensated care. Throughout the 2015 Regular Session, the Senate used a conservative approach to budgeting, setting aside funding to prepare for a decline in LIP. These additional state dollars allow Florida to mitigate the loss of LIP funding in the short term. However, as explained by our state economist Amy Baker, using state dollars to replace federal funding forces us to supplant other priorities and damages our economy. It remains clear that a sustainable long-term solution is needed. As you are aware, the Senate has proposed a Florida solution that will promote the well-being of our constituents and protect the fiscal health of our state. While the letter from CMS outlines a number of policy alternatives, none of these options will allow Florida to maximize both state and federal taxpayer dollars in a more effective manner than by reducing the number of uninsured Floridians seeking basic health care in hospital emergency rooms. Clearly, a conservative free-market expansion of health care coverage is the most fiscally responsible approach. While we may not agree with every policy decision that comes from the federal government, I do agree that coverage, rather than backend supplemental payments, is a better investment for our taxpayers. With today’s direction from the federal government, we will continue to work towards a responsible long-term Florida solution. Special Session will give us the opportunity to address health care within the context of our budget. I look forward to seeing you on June 1.
