HNF Stories
12:02 pm
Fri April 12, 2013

New Report Finds Hidden Savings in Medicaid Expansion

State lawmakers may have overlooked more than $430 million in yearly savings for Florida taxpayers by not accepting the federal dollars promised through the Affordable Care Act.

Credit Tampa Tribune

  The savings, says the Medicaid director at Florida’s Agency for Health Care Administration, come from the Obama administration's recent pledge to pay the full cost of "Medically Needy" recipients annually. These are patients with serious illnesses who cannot pay for their treatment.

Last month, when state budget analysts studied the cost-benefit of expanding Medicaid to cover 1 million low-income uninsured Floridians, they had to leave out savings from "Medically Needy" because they didn’t know whether federal health officials would offer full funding for that program.

AHCA released the report this week to Health News Florida on request. In a telephone interview Thursday, Florida Medicaid Director Justin Senior said he received the news about the full funding for Medically Needy on Wednesday from a high-ranking federal official.

In the current contentious legislative health-care debate, news of the savings might appear to be a game-changer. But it isn’t clear whether there is time to digest the information, with just three weeks remaining in the session, or whether it will matter.

The House and Senate are currently in a standoff over whether to accept federal funding. State Sen. Joe Negron’s plan, called Healthy Florida, would accept the federal funds, but use them to subsidize private coverage for more than 1 million uninsured low-income Floridians. The Obama administration has hinted that it would accept that substitution.

But the House does not want to accept the federal funds, which legislative budget analysts estimate would amount to more than $50 billion over a decade. The first three years of expanded coverage would be fully federally funded under the health law, and then the state would be expected to kick in a small percentage, peaking at 10 percent in 2020.

The savings would more than cover the first decade of Medicaid Expansion under the Affordable Care Act, says Amy Baker, director of the Florida legislature’s Economic & Demographic Research Office.

If AHCA and Baker are correct, it would actually cost state taxpayers less to cover 1 million uninsured low-income Floridians than it would to leave them uninsured. And it would cost a lot less than the House plan released on Thursday, which would provide coverage to many fewer people: 115,000.

AHCA released the report, dated Wednesday, to Health News Florida on request. Justin Senior, Florida's Medicaid director, said he received the news from a high-ranking federal health official about the full funding for Medically Needy on Wednesday. He declined the name the official without her consent.

In the current contentious legislative health-care debate, it might appear to be a game-changer. But it isn't clear whether there is time to digest the information, with just three weeks remaining in the session.

Right now, the Senate and House are in a standoff over whether to accept federal funding.  The Senate's favored plan, called Healthy Florida, would accept the federal funds but use them to subsidize private coverage for more than 1 million uninsured low-income Floridians. The Obama administration has hinted that it would accept that substitution.

But the House does not want to accept the federal funds, which legislative budget analysts estimate would amount to more than $50 billion over a decade. The first three years of expanded coverage would be fully federally funded under the health law, and then the state would be expected to kick in a small percentage, peaking at 10 percent in 2020.

House Speaker Will Weatherford, R-Wesley Chapel, has said he doesn’t trust the federal government to keep its commitment because of the need for budget cuts in Washington.

The House plan was developed by another Pasco Republican, Rep. Richard Corcoran of Land O’Lakes. His Florida Healthy Choices plan offered a list of reasons why Medicaid is not a good program and says those enrolled are deprived of their freedom.

So, how could so much money be saved by eliminating the necessity for Medically Needy? State records show Florida currently pays 42 percent of the cost for the program out of state general revenue.

If Florida agreed to accept federal Medicaid Expansion funds, the adults who are currently in Medically Needy would be covered by private subsidized insurance,  either through the Negron plan or the federal health exchange. Children who are in the Medically Needy program would remain there, according to the AHCA report.

Several private research groups have previously forecast that expanding Medicaid would lead to savings, including Georgetown University’s Health Policy Institute. Co-author Joan Alker delighted in seeing her prediction validated in a state report.

“Our study found the state could generate significant savings  by accepting federal dollars covering people up front with primary and preventive care,  rather than waiting for them to bankrupt themselves and show up in the hospital,” she said.  “The state is now actually showing even greater savings than we initially estimated here at Georgetown.”