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Medicaid Projections Cloud Predicted Forecast

Leon County Judge John Cooper on June 30, 2022, in a screen grab from The Florida Channel.
State of Florida
The Florida Channel
Amy Baker, coordinator of the Legislature's Office of Economic and Demographic Research

Despite a transition to managed care meant to tame huge increases in Medicaid spending, the health-care program for low-income Floridians still threatens to consume almost half of the state's revenue growth, an economist told lawmakers Tuesday.

Forecasters expect Medicaid to eat up 45.9 percent of the growth in the state's general revenue over the next three years, according to Amy Baker, coordinator of the Legislature's Office of Economic and Demographic Research. Baker was speaking to the Legislative Budget Commission, a group of House and Senate lawmakers who have to approve an annual three-year outlook for the state budget.

Overall, the projections approved Tuesday still show a surplus of $635.4 million for the budget year that begins July 1. That surplus accounts for the Legislature's spending in the current year and most of the routine adjustments expected in next year's budget.

But lawmakers on both sides seemed concerned with the growth in Medicaid spending, which comes amid a years-long debate over how to handle the health program and whom it should cover.

Baker said one reason for the growth might be an increase in enrollment sparked by the Affordable Care Act, more popularly known as "Obamacare." While Florida has resisted expanding Medicaid eligibility under the law, people who go to health-insurance exchanges intending to sign up for private coverage might find out they're eligible for Medicaid, Baker said.

"It's not an expansion issue; these are people who are otherwise qualified for the program," she said. "They were always otherwise qualified for the program. It's just, they just never appeared in our history."

There are other factors, as well, Baker said. Health-care inflation, held down by the recent recession, has begun to return to more normal levels. And the cost of prescription drugs continues to grow.

In addition, the state has approved a 7.7 percent increase for the managed-care plans that now administer Florida's Medicaid program. Baker said the national average for health-care inflation is a little less than 4 percent.

The managed-care increase drew questions from Democrats, who pointed out that Republican lawmakers promised lower costs when they approved the program in 2011. The federal government gave the program a final go-ahead in 2013.

"I continually heard that we would be able to contain costs and that this would be much more cost-effective, but I'm looking at these numbers, and I don't see that. ... I'm very concerned that we were sold a bill of goods that said moving members into a managed-care program would contain costs, and it's not," said Rep. Janet Cruz, D-Tampa.

Baker said the managed-care system was still relatively new, and that costs might slow down in the future as the private companies get a better handle on the program.

"You're still seeing them trying to deal with the population they have. And it takes awhile for them to identify savings," she said.

House Appropriations Chairman Richard Corcoran, R-Land O' Lakes, told reporters after the meeting that it was difficult to tell how much the program was actually saving given the increase in health-care inflation and the growing enrollment caused by the Affordable Care Act.

"But I think if you did those scenarios together, you'd still see that this is a cost-savings on that, but it's still not enough of a cost-savings, I don't think," he said. "And we need to look at that given how much that piece of the pie is slowly eating up all the other pieces of the pie."

The increases could set up a debate in 2016 about how to further contain costs in Medicaid. Corcoran said lawmakers could look at "consumer-driven" concepts, which Republicans have used to refer to concepts like expanding the use of health-savings accounts for some Floridians.

Senate Appropriations Chairman Tom Lee, R-Brandon, said sweeping changes to the program might be needed. He said many of the current proposals amount to "taking a scalpel to something that you need a bulldozer for." But he also said ultimately fixing the program could take years.

"I think the changes are much more substantial than we can get through in a single or a couple of sessions," Lee said.