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Delays Often Cost FL Federal Funds

Leon County Judge John Cooper on June 30, 2022, in a screen grab from The Florida Channel.
USF Health News
The Florida Channel
Leon County Judge John Cooper on June 30, 2022, in a screen grab from The Florida Channel.

When federal money’s on the table, most states go for it like coupon-clippers at a closeout sale.

But studies show that when it comes to seeking federal money, Florida holds back, particularly in health care. Sometimes, the state changes its mind later and asks for its share of the money, only to discover that it’s too late; other states have made off with it.

Some lawmakers in Tallahassee, including Senate Republicans, are tired of what they see as foot-dragging by House leaders from their own party on the biggest pot of money they’ve ever been offered: more than $50  billion in Medicaid expansion funds to cover those under the poverty level. The Senate has been willing to take it for two years, but the House has balked, saying it doesn’t want to take federal funds.

Sen. Don Gaetz recently called out the House for “intellectual dishonesty” on the matter, since a third of the state budget is made up of similar matching-fund programs already.

“These are Florida dollars,” sent to Washington by citizens of the state, Gaetz, R-Niceville, declared at a March 10 hearing. “I want my billions back!”

On Tuesday, two key panels in the Florida Senate -- the Health Policy Committee and the Appropriations Subcommittee on Health & Human Services – passed a bill intended to bring the billions back.  It would potentially cover between 800,000 and 1 million Floridians who now make too much money to qualify for Medicaid and too little to qualify for the federal Marketplace and its subsidized plans.

Leon County Judge John Cooper on June 30, 2022, in a screen grab from The Florida Channel.
Credit WLRN
The Florida Channel
Senator Don Gaetz: 'I want my billions back.'

And those with long memories of Florida politics say they won’t be surprised if the state follows its usual pattern: Wait until the money is nearly gone before agreeing to take it.

On matters having to do with federal funds for health and social services, says University of South Florida professor Jay Wolfson, “Florida has always lagged behind the rest of the country.”

Money Flowing From, Not Back to Florida

The current Medicaid expansion debate shines light on an issue that has long worried some lawmakers: A series of studies by independent groups shows that Florida receives less federal money than it sends in.

In fact, Florida was ranked in last place for receiving grants under the Patient Protection & Affordability Act -- often called Obamacare -- in a studyreleased last summer by The Center for Healthcare Research & Transformation. 

Under orders from Gov. Rick Scott and then-House Speaker Dean Cannon in 2011, Florida agencies turned down grants that had been sought before the election of November 2010. Ironically, given Scott’s emphasis on cutting taxes, many of the grants his administration turned down were intended to save money for taxpayers.

Leon County Judge John Cooper on June 30, 2022, in a screen grab from The Florida Channel.
The Florida Channel
Former House Speaker Dean Cannon

One was the “Money Follows the Patient” program, $35.7 millionto help patients leave nursing homes for community settings. Another was a $1 million grant to help state actuaries in rate reviews of health insurers.

Florida’s reluctance to take federal funds didn’t begin with Obamacare, though. Southern states have been suspicious of edicts from Washington for at least 150 years, since the post-Civil War era, according to USF’s Wolfson. That continues today, he said.

“State lawmakers don’t want someone from Washington to tell them what to do,” Wolfson said. "They say, ‘It was bad enough during Reconstruction, we’re not going to do it again.’”

Historic Distaste of Dependence on Federal Funds

But rapidly-growing Florida had to depend on federal funds for transportation and education funds in the last half of the 20th century. A crucial moment came with the 1965 passage of laws creating  Medicare, a federally funded health-insurance program for the elderly and disabled, and Medicaid, a joint state and federally funded program for those with very low incomes.

Since funding for Medicare comes from the top, federal officials could call the shots on payments and eligibility. But on Medicaid, states decided how generous the plan would be.

Like other Southern states, Florida set the rules for enrollment well below the federal poverty level. In meagerness, they rivaled those of states such as Mississippi and Texas, USF’s Wolfson recalled.

“We used to joke about Texas,” Wolfson said. “We said that to be eligible for Texas Medicaid, you had to be dead.”

In the 1980s, when it became clear that some hospitals and clinics were getting a “disproportionate share” of Medicaid and uninsured patients because some health-care providers wouldn’t participate in the program, federal match grants were created to keep them from closing their doors.

Local governments contributed to funds that states submitted to the federal government for a matching amount. States that were aggressive saw their hospitals and clinics prosper. But Florida was caught napping when the program was capped in 1991.

Federal data on disproportionate share funds by state prior to enactment of the Affordable Care Act showed that Texas was receiving $1 billion a year,  along with New York and California. Florida received one-fifth that amount, ranking 44th among the states in per-person funding.

A 2013 Health Affairs articlenoted a similar disparity in Graduate Medical Education or GME grants, which were enacted in 1987. New York, Massachusetts, Pennsylvania and other states with well-established medical schools and hospital teaching programs quickly grabbed a lion’s share of the residency teaching slots. Florida did not.

Congress froze that medical education grant program in 1996, deciding it was no longer needed, leaving Florida out in the cold. As of 2009, according to the Health Affairs study, Florida’s rate per 100,000 population for federally funded residency slots was 14, compared with New York’s 77 and Massachusetts’ 66. The US average was 29.

Leon County Judge John Cooper on June 30, 2022, in a screen grab from The Florida Channel.
Credit Centers for Medicaid and Medicare Services
The Florida Channel
Eliot Fishman, federal Medicaid official

The Affordable Care Act, passed in 2010, corrects some disparities in the disproportionate share and GME funding programs – two of the elements of what Florida calls its “Low Income Pool,” or LIP. 

Most of the $2 billion in LIP funds that Florida received last year will go away on June 30, a federal Medicaid official said last month.

Eliot Fishman, the chief of Medicaid within CMS, reminded Florida it could tap billions of dollars in Medicaid expansion funds to provide health coverage for the low-income uninsured. That’s the same population that is pressuring the budgets of the LIP-funded hospitals and clinics.

Fishman said other states are way ahead of Florida in using federal grants for pilot projects in improving care and cost-efficiency.

“You can’t even start these conversations unless people have coverage,” he said.

House Not Seeing Senate Plan as ‘The Fix’

Getting the uninsured covered is the aim of Senate Bill 7044, which creates the Florida Health Insurance Affordability Exchange or FHIX (nicknamed “The Fix”). If it were to pass both the Senate and House and meet the governor’s approval, it would need permission from CMS before it could be enacted.

Leon County Judge John Cooper on June 30, 2022, in a screen grab from The Florida Channel.
Credit Florida Legislature
The Florida Channel
Rep. Matt Hudson, R-Naples

The bill would take the federal funds offered for Medicaid expansion to offer vouchers to uninsured Floridians below the poverty level. They could choose coverage among private health plans on a virtual marketplace. An enrollment site created through state funds for another purpose is available for the new enrollments, said Sen. Aaron Bean, sponsor of the bill.

The details of the Medicaid expansion alternativeare still being worked out, but the tentative plan includes a requirement that enrollees be working or looking for a job or in school.  Health savings accounts also would be provided to give enrollees an incentive to shop wisely. They would have to pay small premiums toward coverage, between $3 and $25 a month on a sliding scale.

And if they failed to pay the premium, enrollees would be locked out for six months.

There is some question of whether the US Centers for Medicare and Medicaid Services, CMS, would approve the design, because of the requirement for work and premium payments. But those details can be worked out in negotiations, said Bean, R-Jacksonville.

Leon County Judge John Cooper on June 30, 2022, in a screen grab from The Florida Channel.
Credit Agency for Health Care Administration
The Florida Channel
Florida Medicaid Director Justin Senior

“We need to have options. We need to be ready. We need to be agile,” he told fellow health-spending panel members on Tuesday, the day the bill passed there and in Senate Health Policy by unanimous votes.

CMS official Fishman made it clear his agency wants Florida to participate in some kind of Medicaid expansion, and the Senate is counting on that to make the plan’s acceptance more likely.

But it’s one thing to persuade federal officials. It’s another to persuade the House. That chamber has turned down previous Senate attempts to capture the federal funds – most notably, a plan sponsored  by Sen. Joe Negron in 2013 that had many of the features of the current one. Florida Medicaid director Justin Senior told senators earlier this month that federal officials said they would have accepted the Negron plan.

There is intense time pressure to pass a plan in the current legislative session. For one thing, most of the LIP funding is expected to end on June 30. For another, the last year that the federal government will pay 100 percent of the cost for Medicaid expansion is 2016. After that, the match edges down gradually to 90 percent in 2020.  Acting quickly could make a difference in state revenue of  hundreds of millions of dollars.

Leon County Judge John Cooper on June 30, 2022, in a screen grab from The Florida Channel.
Credit Florida Legislature
The Florida Channel
House Speaker Steve Crisafulli

But there is plenty of opposition to the Senate plan in the House. Speaker Steve Crisafulli and Majority Leader Richard Corcoran say they don’t foresee a vote on it. Rep. Matt Gaetz, who chairs the spending panel on health issues, has said repeatedly that he’s not going to bring it up.

Hudson, R-Naples, said Florida already doesn’t have enough hospitals or doctors to take care of those who have coverage. And he doesn’t trust the federal government to keep paying its share of the tab for the program.

"I don’t believe for one moment that this is a good plan for Florida and I would certainly not change my opinion that way," he said.

Carol Gentry is a special correspondent with WUSFin Tampa. Health News Floridareceives support from the Corporation for Public Broadcasting.

Carol Gentry, founder and special correspondent of Health News Florida, has four decades of experience covering health finance and policy, with an emphasis on consumer education and protection.