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Wednesday, January 20, 2016

League of Women Voters releases report pointing out just how expensive Florida's refusal to expand Medicaid really is

Posted By on Wed, Jan 20, 2016 at 3:44 PM

Remember last year when Gov. Rick Scott made such a fuss over the federal government’s decision not to renew low-income pool funding (aka LIP, a pot of money used to help hospitals offset the cost of caring for the uninsured) at the same rate it had offered in the past? You probably haven’t heard much about LIP since then, after the feds struck a deal with the state to renew the program for a little while longer, but at a much lower funding level. That doesn’t mean the problems the state faced last year – or the reduction in funding, brought on by the state’s stubborn refusal to accept federal money to increase its Medicaid program – has been resolved. If anything, things could be about to get worse. 

According to a report written by Florida Legal Services and released by the League of Women Voters of Florida today, funding for LIP (which was already reduced by $1 billion for 2015-2016) is going to continue to drop, and the burden for finding a way to care for the uninsured is going to shift to counties, which will have to find new ways to fund their indigent-care programs. And ultimately, it could mean an increase in local taxes if counties don't have enough money to make up for the shortfalls in funding once offset by federal dollars. To make matters worse, the organization says, state legislative leaders proclaimed earlier this week that the one thing that could go a long way toward alleviating the problem – an expansion of Medicaid to bring the state in line with the Affordable Care Act’s provisions – has no chance of happening this session. Or the one after. Possibly not even the one after that, either.

“Yesterday, [Sen.] Don Gaetz made a statement saying this issue was probably dead for this legislative session and probably for the next two to three years,” Pamela Goodman, president of the League of Women Voters of Florida said in a conference call held today to discuss the report, which analyzes the impact the state’s inaction could have in the coming years. “His point is that Tallahassee leaders will not be looking at expansion [of Medicaid or similar healthcare programs].”

Opponents of the Affordable Care Act probably applaud this decision. But according to the League's analysis, the state is basically just throwing money out the window – money that every Florida taxpayer is already sending to Washington, D.C. to be spent on programs like Medicaid. 

This is complicated (and terribly dry) stuff, so I'm going to try to keep it brief. But here’s the takeaway from today’s call and report (which you can read in full here):

Right now, the federal government matches Florida’s Medicaid funding at about a 60/40 ratio. So for every $40 Florida spends on Medicaid, the feds pony up $60. If the state agreed to expand Medicaid, which would bring Florida in line with the ACA and expand access to healthcare to hundreds of thousands of Floridians, the federal government has offered to cover the cost at 100 percent through 2016. That’s right – the state would not need to put in any money to reap that benefit. For 2017, the match would be reduced to 95 percent, but the state's contribution would still be far lower than it is now. That matching rate is available if, and only if, the state expands its Medicaid program to cover more uninsured people. But the state doesn't want to do that. 

Meanwhile, in 2015, the Center for Medicare and Medicaid Services informed the state that LIP, which was always intended to have an expiration date, was winding down. Not because the feds want to force Florida to comply with the Affordable Care Act (as the state implied last year when it kicked and screamed and took the matter to court to force the federal government to fund the LIP program). Rather, the federal government determined that LIP is an extremely inefficient way to spend money. It’s much more efficient, humane and cost effective to give people health insurance that they can use to stay out of hospitals, rather than pay hospitals to care for so many uninsured people.

Here’s another crazy thing about LIP and how it was implemented in Florida – according to the League of Women Voters, although LIP was intended to help cover the cost of caring for the uninsured, the state was actually spending the money to pay hospitals in lump sums to make up for the fact that the state’s Medicaid rates were far too low. That’s right – LIP money wasn’t all being paid out to help the uninsured. Instead, some of it being used to help the state keep its Medicaid reimbursement rates as low as possible.

After a protracted battle between the state and federal government last year, the CMS told the state that it would continue to fund LIP, but that it would be reduced. During 2015-16, it was reduced by $1 billion, which is half of what the state has been accustomed to receiving; for 2016-17, though, it's going to be cut by 75 percent, to $608,000,000. So the LIP problem, which we haven't heard much about lately, is actually about to become a big problem. Over the next five years, the League's report determines, the cumulative effect on the state is likely to be in the billions of dollars – eventually that cost is bound to trickle down, somehow, to taxpayers – and could cost the state up to 15,000 jobs.

Per the report, it all comes down to this:

"Put another way: Florida tax payers and providers will be absorbing the cost of treating (most likely through hospital emergency rooms) uninsured Florida residents whose coverage could have been purchased almost entirely with federal funds, and they will be doing so with far less funding than has been available since LIP began in 2006."

Who wants to bet that the state finds a way to blame the federal government again? 

The complete report released by the League of Women Voters of Florida can be read here. 

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