Medicaid expansion could save FL $200 million a year, but will politicians go for it? And what does the public want?

By: - July 5, 2019 7:00 am

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What if Florida had a way to save money on the prison health-care crisis?

Or expand treatment programs for opioid addiction or provide more mental-health services?

Or increase health-care services for the poor and disabled?

Would state leaders shun that opportunity or embrace it? Given recent history, it is likely that Republican Gov. Ron DeSantis and GOP legislative leaders will take a pass.

That’s because those benefits are associated with the expansion of Medicaid, the state-federal health care program for the poor and disabled. DeSantis and the legislative leaders remain opposed to expanding Medicaid under the federal Affordable Care Act.

“Medicaid expansion is the worst of all band-aids,” House Speaker Jose Oliva, a Miami-Dade County Republican, said prior to the 2019 session. “We’re going to take a form of healthcare that most doctors don’t accept. That reduces the quality the more people you pile onto it. And we’re going to find that as a solution to access to healthcare?”

That firm opposition resulted in another year when the Legislature refused to consider a Medicaid expansion plan, although Democratic lawmakers supported it. Florida remains among a minority of 14 states that have yet to expand Medicaid coverage under the 2010 federal health care act.

But what about average Floridians?  What do they think about Medicaid expansion?

Currently, some 3.9 million Floridians rely on the Medicaid program, which costs some $29 billion a year in state and federal funding.

And nearly 1 million more Floridians could potentially become eligible under a Medicaid expansion by 2022-23 — if voters act, according to advocacy organizations.

A group called Florida Decides Healthcare is trying to place a state constitutional amendment before voters in 2020. It would require the state to expand Medicaid to cover adults under the age of 65 who earn less than 138 percent of the federal poverty level. In 2019, that annual income level represents $29,435 for a family of three or $17,276 for an individual.

The group has collected 82,157 signatures in support of the Medicaid expansion amendment as of early July, according to the state Division of Elections. But it has a long way to go to reach the more than 766,000 signatures that must be validated by Feb. 1 in order to make it onto the 2020 ballot.

The initiative has gained enough signatures to trigger a Florida Supreme Court review of the ballot language. And state economists are working on a financial and economic analysis of the measure.

As part of that analysis process, advocates for the expansion presented a report showing there would be significant benefits from expanding Medicaid in Florida.

Anne Swerlick, a lawyer and analyst for the Florida Policy Institute, a nonpartisan advocacy group that prepared the report, said the expansion could result in a net savings to the state of nearly $200 million.

“Medicaid expansion provides Florida an unprecedented opportunity for state budget savings and revenue gains that far exceed the cost of expansion,” Swerlick said.

Additionally, the report shows the federal contribution for the expansion would amount to about $4 billion a year and result in increased economic activity that would produce higher state and local tax collections, Swerlick said.

A prime element in the savings is the fact the federal government would pay 90 percent of the expansion costs. It compares to the regular Medicaid federal match of about 61 percent.
Based on the 2022-23 budget year, Florida would have to come up with about $442 million a year for its 10 percent match.

But the report shows that costs would be offset by more than $600 million in savings, resulting in a net savings of $199 million.

Here are how some of the savings would work, according to the report.

Florida could save nearly $58 million a year by using the Medicaid expansion to cover sick prisoners who are sent to hospitals.

The Florida prison system is in the midst of a health-care crisis. DeSantis pushed for and lawmakers approved increases this year in prison health-care programs, including helping more prisoners with Hepatitis C, mental illnesses and disabilities.

But with an aging prison population, those needs will only grow. And more money spent on health care means less money for other critical prison system needs, including rehabilitation programs for prisoners and pay raises for the prison staff.

Medicaid doesn’t normally cover care for prisoners. And Florida doesn’t provide Medicaid to childless adults who are not disabled. But Medicaid does allow coverage for prisoners sent to “acute-care facilities” outside the prison system, such as hospitals.

And with an expansion plan covering all adults who meet the poverty-level standard, most of those hospitalized prisoners will become Medicaid eligible, resulting in $58 million savings by 2022, the report shows.

The report notes the savings are not just based on theoretical projections for Florida. But they reflect savings already gained by other states that have expanded Medicaid.

“Expansion states are seeing health-care related savings in their correction budgets for newly Medicaid-eligible prisoners who are treated in an inpatient medical facility outside of the state correctional system,” the report says.

Another major savings would come from using the Medicaid expansion money to pay for mental-health and addiction programs that are now state funded. It could result in more than $200 million in savings, the report shows. And those are programs facing an increased demand because of an ongoing opioid crisis and mental health issues in the criminal justice system as well as the schools.

The experience in other expansion states shows: “The largest savings in this category come as individuals who previously relied on state-funded behavioral health programs and services – including mental health and substance use disorder services – are able to secure Medicaid coverage in the new adult group, which means states can fund these services with federal – not state – dollars without reducing services,” the report says.

The report identifies more than $266 million in health-care savings by shifting individuals from programs funded through the existing Medicaid system to the expansion system. The shift produces the savings because of the difference between the 61 percent federal funding match for the regular Medicaid program and the 90 percent match for the expansion.

For instance, Florida could save more than $172 million by shifting individuals who are facing major medical problems and must spend down their incomes to qualify for the “Medically Needy” program to the Medicaid expansion group, the report shows.

Rather than meeting the cumbersome eligibility requirements of the Medically Needy program, many of those patients could qualify for the expansion program simply by meeting the 138 percent poverty level standard, according to the report.

A copy of the report as well as other documents related to the state Office of Economic and Demographic Research’s Financial Impact Estimating Conference review of the Medicaid expansion amendment can be found here.

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Lloyd Dunkelberger
Lloyd Dunkelberger

Lloyd Dunkelberger has been covering Florida government for over three decades. He’s reported and edited in Tallahassee for the New York Times Regional Newspapers group, Florida Politics, and the News Service of Florida. He grew up in Jacksonville and Palm Beach County and got his journalism degree at the University of Florida.