When they voted to kill the Medicaid expansion this month, Republican lawmakers knocked the government-run insurance program as flawed, costly and out-of-control.
But that very program is about to become big business for insurance companies competing to serve low-income Floridians.
Even without expanding Medicaid, 3 million residents still remain on the rolls. About half of them get their benefits through privately run managed care. Starting next year, nearly everyone will have to use HMOs and other forms of managed care, thanks to federal approval of a Republican plan in the works for years.
The prospect has insurers gearing up, and industry analysts talking profit potential.
Last week, some Republicans were reconsidering the spurned Medicaid expansion funds — as long as they are used to purchase private insurance for more Floridians. If that happens, these will be even bigger times for the industry, courtesy of Medicaid.
The players have a variety of game plans to win managed care contracts:
Blue Cross Blue Shield of Florida, a newcomer to Medicaid, teamed up with a Philadelphia firm that specializes in Medicaid managed care.
Molina Health Care opened primary care clinics for Medicaid enrollees in South Florida and plans to open more.
Tampa-based WellCare, the biggest Medicaid player in the state, hired 40 full-timers in the past year and in February opened an Orlando call center with more than 280 new positions.
“We’re committed to Florida,” said Michelle Davidson, spokeswoman for Florida True Health, the joint venture between Blue Cross and AmeriHealth Mercy Family of Companies.
Though federal officials only recently gave the OK for Florida to move Medicaid recipients into privately managed care, preparations have been going on for a while. Managed care organizations have until Friday to submit their state bids to offer plans. Enrollment is to begin next year.
Medicaid is a $21-billion a year business in Florida. Though physicians and other providers complain about Medicaid’s skimpy reimbursements, insurers can do well, according to health care analysts.
Medicaid plans typically post 2 percent profit margins, said independent analyst Allan Baumgarten, who writes annual Health Market Review books in states including Florida. They’re especially attractive for HMOs, which have been losing ground overall.
“Medicaid has been very profitable,” said Baumgarten. “The opportunities for these plans are significant.”
Republicans hailed the switch to managed care as a way to rein in the most expensive item in the state budget.
Their 2011 law made managed care mandatory for nearly all Medicaid patients, who previously could choose the traditional fee-for-service model in which providers directly bill the program. The law divides the state into 11 regions that will be served by at least two and up to 10 plans. Medicaid’s long-term coverage for the elderly was moved to a separate managed care program.
But since most Medicaid dollars come from the federal government, that law couldn’t take effect until a waiver was recently granted.
The promise was that private insurers would be better gatekeepers, cutting down on waste in the program. To test the idea, five counties — including Broward — were put into a pilot program starting in 2006. Results were mixed, with a number of for-profit HMOs dropping out when they couldn’t make enough money. State officials say new financial penalties will discourage that in the statewide roll-out.