HNF Stories
10:15 pm
Thu April 18, 2013

Look at Hidden Savings on Medicaid Expansion, Hospitals Plead

The Florida Hospital Association wants state budget estimators to finish their cost-benefit on Medicaid expansion now, before lawmakers take a fateful vote that would send  billions of dollars earmarked for Florida off to some other state.

Bruce Rueben
Bruce Rueben

Hospitals think that new information will show the state could save a bundle if it agrees to accept federal funds to cover 1 million uninsured Floridians. They think the savings might help persuade House Republicans to drop their opposition to all things connected to the Affordable Care Act, including the funds for the uninsured.

The reason for their optimism is a new report issued Friday by Medicaid officials at the Agency for Health Care Administration. They project savings to the state budget of as much as $430 million a year.

"There's a huge amount of money here," said FHA President Bruce Rueben. "It's important to us to know that the state recognizes that, helps us to plan, helps us to discuss this issue."

Stateline reports that hospitals are pushing hard in Florida, Ohio and other Republican strongholds where legislatures resist acceptance of federal money. But supporters of Medicaid expansion say economic and public health arguments don't seem to sway public officials who are ideologically opposed to  government programs in general and Medicaid in particular -- not to mention the Affordable Care Act.

The only hope in cracking through the resistance, they say, is by warning representatives that a "no" vote may mean their local hospital will close.

As of Jan. 1, when most of the Affordable Care Act takes effect, hospitals' subsidies for treating the uninsured are getting whacked. That's because the health law assumed hospitals wouldn't have many uninsured patients anymore.

But the Supreme Court said states could choose whether to accept the federal funds to cover the uninsured. So far the Florida House is saying no.

Gov. Rick Scott and the Senate are saying yes. A plan by Sen. Joe Negron called Healthy Florida, which was unanimously passed by a key committee on Wednesday, would accept the federal funds and use them to subsidize the purchase of private coverage. Health officials in Washington have hinted they'd approve it.

As the stand-off intensifies, with just 2 1/2 weeks to go in the legislative session, hospitals are becoming increasingly frantic. They have begun running ads naming names of lawmakers who aren't willing to take the federal funds, urging voters to apply pressure.

Rueben sent a letter Wednesday to Scott, with copies to Senate President Don Gaetz and House Speaker Will Weatherford, asking for an expedited meeting of state budget estimators to complete the projections left hanging in March.

The letter doesn't mention the new calculations by Florida's Medicaid office that show the savings -- data first reported by Health News Florida last week.

They show the state could cover 1 million people at no net cost -- in fact, with considerable savings -- assuming the federal government kept its commitment, which is something House leaders have questioned. The health law says the federal government will pay 100 percent of the cost of the newly covered for three years, then phase it down to 90 percent by the year 2020, where it would stay. 

The last time the estimators came up with a cost-benefit analysis on Medicaid Expansion, they forecast that the state would have to put in about $3.5 billion over 10 years, while bringing in $51 billion in federal funds.

The new Medicaid analysis says that even if the state doesn't use federal funds to expand, the state will save about $130 million a year on Medically Needy because some patients now on the program would be getting private coverage through the federal exchange.

However, if the state accepts the federal funds to cover the uninsured up to 138 percent of the poverty level, AHCA's analysis says that the savings would jump to $430 million a year --  $4.3 billion over a decade. That more than covers the $3.5 billion in 10-year estimated costs that the analsts had forecast for the state. (Editor's note: The wording of this and the preceding paragraph has been recast since the article was first posted to improve accuracy and clarity.)

The Agency for Health Care Administration has posted the report on its website, titled "Medicaid Impact Conference Issues -- Medically Needy."

The Medically Needy program is an offshoot of Medicaid that pays the medical bills for people who are seriously ill and have spent all their money. Under the Affordable Care Act,  the people who now resort to Medically Needy would no longer require it because they would have coverage.

Depending on their income, they would either be rolled into the Medicaid expansion group or become shoppers on the federal health-plan marketplace, with subsidies to buy private coverage. There will likely be little difference between the two types of coverage, since Florida has overhauled its Medicaid program to enroll virtually all of its Medicaid patients in private managed-care plans. Long-term-care patients begin the process in August; the rest await formal permission from the federal Department of Health and Human Services.

Rueben's letter to Scott mentioned other spending programs that might also be erased from the budget because insurance plans will cover them: mental health and substance abuse treatment, county health department services and the AIDS Drug Assistance Programs. The Medicaid report does not mention any savings related to these programs.

It's up to the Social Services Estimating Conference to determine whether the Medicaid analysis is correct.  Its members are Michael Anway from the governor's office, Amy Baker of the Economic & Demographic Research Office, Scarlet Pigott from the Senate staff and Eric Pridgeon from the House staff.

Anway sent an e-mail to the others on April 9, asking when they could arrange a meeting to finish the estimates. Baker was willing to meet right away, her reply e-mail showed, but the legislative analysts had not responded as of Tuesday.

Katie Betta and Ryan Duffy, spokesmen for Senate and House leaders, told Health News Florida that Pridgeon and Pigott were too busy working on the budget to focus on Medicaid expansion estimates right now. The House and Senate are trying to reconcile differences.

The budget estimators put the Medicaid expansion forecast on hold when they met in March because they didn't know whether the patients in Medically Needy would be 100 percent covered by federal funds or draw the usual 58 percent federal match.

Last week, Florida Medicaid Director Justin Senior said he was able to get an answer from a high-ranking official of the Centers for Medicare and Medicaid Services. CMS said Medically Needy patients will be covered 100 percent, Senior said.