In Depth
11:59 am
Fri December 21, 2012

State's Medicaid-Expansion Estimates Soar

Gov. Rick Scott will be armed with new, far  higher cost estimates for Medicaid expansion when he meets with Health and Human Services Secretary Kathleen Sebelius  on Jan. 7.

Under the Affordable Care Act, approximately 1 million uninsured Floridians would be eligible for the joint federal/state program in 2014. The Supreme Court ruled in June that the Medicaid expansion was voluntary.

Most states are expected to go along with the expansion because the federal contribution is 100 percent through 2016 and then tapers to 90 percent by 2020 and stays there, according to the law. But Scott and other Republicans have questioned whether the federal government will keep that commitment, given the deficit, and say there are hidden costs to state taxpayers that are unsupportable.

The new 10-year estimate of cost to the state, released on request by the Agency for Health Care Administration after the Associated Press reported it was available,  forecasts a cost to the state of nearly $26 billion over 10 years – more than three times the one released a few months ago.

"As more information becomes available, we’re updating the figures," AHCA spokeswoman Michelle Dahnke explained in an e-mail.

But a number of Medicaid number-crunchers are questioning the  accuracy of the forecast.

“These estimates don’t even pass the laugh test,” said Joan Alker, a health policy analyst at Georgetown University who recently studied what it would cost Florida to expand Medicaid. On Nov. 15, her team released a study that calculated the state would actually save money overall by expanding Medicaid; they calculated the state would receive $16 for every dollar it spent.

Soon after that report, the Urban Institute and Kaiser Family Foundation released another study that found Florida's Medicaid costs would rise 4.6 percent over 10 years, or just over $1 billion, while covering an additional million people. And if you subtract the money that the state and local governments now spend on care for the uninsured, the added cost would be even lower, the study said.

That $1-billion forecast is far, far below AHCA's new estimate of  an added cost of $26 billion over 10 years. The new estimate is three times as high as the agency's own forecast in August.

AHCA's Dahnke said in an e-mail that the forecast for state costs went up after the federal government released its rules on how states should carry out the law.

"For example, as it relates to the physician fee increase, it wasn’t until the recent rule came out that we learned ... the federal government wouldn’t be covering the entire administrative cost," she wrote. "The mandated physician fee increase was portrayed to be 100 percent federally funded for the initial two years.  However, federal regulations revealed that states will bear certain administrative costs.  Florida’s costs are projected to be $4 million per year in both 2013 and 2014."

Dahnke said the amount the state pays HMOs to care for Medicaid patients will have to rise to cover the Health Insurance Tax that is part of the law.

But Medicaid analysts say the report makes wild assumptions that skew the results.

The two wildest, said Georgetown's Alker and Greg Mellowe, policy director for consumer group Florida CHAIN, are:

--AHCA assumes the federal government will renege on its promise to pay the lion's share of the cost of expanded coverage, including 100 percent through 2016.  Instead, the state assumes the federal government will pay only its usual rate, 58 percent.

“The Governor is saying that the federal enhanced match, which is a pillar of the Affordable Care Act, will be repealed by President Obama tomorrow,” Alker said.

--The report also assumes Florida will enroll every eligible person virtually overnight, outperforming all other states, even though historically Florida has lagged behind other states in signing up eligibles.

Mellowe called these assumptions "irresponsibly egregious." He said the  assumption that the federal government won't pay the rates called for under the law "has no basis in fact whatsoever and is simply made up to create the desired “sticker shock.”'

--Health News Florida, journalism for a healthy state, is a service of WUSF Public Media. Contact Editor Carol Gentry at 813-974-8629 (desk) or 727-410-3266 (cell), or by e-mail at cgentry@wusf.org.