Medicaid spending caps in GOP health plan could be costly for Florida, experts say

Florida stands to lose more than it gains under the bill unveiled this week by House Republicans to repeal and replace the Affordable Care Act — especially when it comes to the 4.3 million state residents who rely on Medicaid, advocacy groups reviewing the new legislation said Tuesday.

The House bill, called the American Health Care Act, calls for, among other things, a spending limit — known as “per capita caps” — for each person enrolled in Medicaid beginning in 2019, with annual adjustments for medical inflation. Any amount spent above the cap would be at the state’s expense.

That’s a problem for Florida, said Joan Alker, a researcher and Medicaid expert with Georgetown University’s Center for Children and Families, because the state could become a victim of its own success at cutting program spending over the years.

“Florida should be especially worried about the caps,” Alker said during a teleconference hosted by the Florida Philanthropic Network, a Tampa-based nonprofit and advocate of health insurance coverage expansion.

Under its current structure, Medicaid spending is open ended, with the federal government guaranteeing a 61 percent match for every dollar that Florida spends to fund the program. But the AHCA, which will be voted on by two House committees this week, would end the guaranteed federal match and cap Medicaid spending at 2016 levels.

Traditionally, Alker said, Florida’s spending for Medicaid has ranked at or near the bottom among all states, which means its spending cap is likely to be lower than the national average.

To make matters worse, Alker said, the rate of Medicaid enrollment in Florida among disabled persons and low-income seniors — the most expensive populations to cover under the program — has risen faster than national averages over the past decade.

From 2006 to 2015, Alker said, Florida’s low-income elderly population — defined as seniors who earn less than $24,000 a year for an individual or $32,000 a year for a two-person household — grew by 25 percent compared with a national average of 14 percent.

And the rate of Floridians who qualify for Supplemental Security Income — a federal program that pays stipends to low-income people who are 65 or older, blind or disabled — also has outpaced the rest of the nation by 35 percent compared to a national average of 17 percent. SSI beneficiaries are automatically eligible for Medicaid.

“These are folks who wind up on Medicaid and they’re very expensive,” Alker said. “The old are going to become even more expensive over time.”

It’s not just the elderly and disabled who could run up costs on Medicaid. New medical therapies, natural disasters and public health threats such as Zika could force Medicaid spending to rise unexpectedly in Florida, Alker said.

Rising Medicaid costs without the guarantee of federal matching funds could put the state in a position of freezing enrollment, reducing benefits or lowering payments to doctors and hospitals — and passing the costs of providing care to local hospitals and counties, said Miriam Harmatz, a senior health attorney with Florida Legal Services, a nonprofit legal aid group.

“People’s needs don’t change,” she said, “just because the federal government caps its contributions.”

With a Medicaid spending cap, Harmatz said, state legislators would have few choices to control costs: they could limit enrollment — which would lead to waiting lists — cut services for beneficiaries or reduce payments to hospitals and doctors.

Once those options are exhausted, she said, local hospitals and county governments could be on the hook for providing care to uninsured and low-income residents.

“All of those costs for vulnerable populations go back to the counties,” she said.

Miami-Dade would be especially hard hit, she said. It had the second-highest uninsured rate in Florida before 2014 — the year that government subsidized health plans became available through the ACA — and the county is home to Jackson Health System, the state’s largest safety net hospital system.

Lidia Amoretti, a spokeswoman for Jackson Health, said in a written statement that the AHCA contains additional funding for hospitals in the 19 states, including Florida, that did not expand Medicaid as provided for under the ACA, also known as Obamacare.

“The proposal would certainly help Jackson continue carrying out its historic mission,” Amoretti said in the statement. “But the proposal is in its early stages, and it’s impossible to predict the long-term overall impact until more details are developed about who would be eligible for coverage and able to afford it.”

But while the bill rewards states such as Florida for refusing to expand eligibility for Medicaid to nearly all low-income adults, the benefit is small potatoes compared to the federal funding the state could have received, Alker said.

If state legislators had expanded Medicaid under the ACA, then the federal government would have paid 100 percent of the cost — and never less than 90 percent — to cover an additional 700,000 people, about $5 billion a year.

The new House bill provides $2 billion a year for non-expansion states, which Alker calculated would amount to about $339 million annually for four years for Florida.

“It’s obviously far less than the state would have gotten if they’d picked up the Medicaid expansion,” she said.

But the 31 states and the District of Columbia that expanded Medicaid may take an even bigger hit under the GOP plan. The legislation covers newly eligible Medicaid beneficiaries at no less than 90 percent of their costs as long as they are enrolled before January 1, 2020.

After that date, medical costs for Medicaid beneficiaries eligible under an expansion would be covered at each state’s basic Medicaid matching rate, which can range from 50 to 80 percent for every state dollar.

“That’s a pretty sizable drop,” said Matthew Buettgens, a researcher with the nonprofit Urban Institute, which advocates for coverage. “Many of the expansion states tend to have lower match rates and a lot of the southern and western states that didn’t expand have higher match rates.”

Medicaid is far-reaching in Florida, especially among low-income children. Medicaid covers 41 percent of all children in the state and funds half of all births in Florida, according to the health department.

While the nonpartisan Congressional Budget Office has not yet scored the bill, which would provide estimates on costs and the numbers of Americans who might lose, gain or keep their coverage, independent studies of Medicaid caps project big reductions in funding.

A study last month by Avalere, a health care consulting firm in Washington, D.C., estimates that per capita caps would cut federal Medicaid spending by $110 billion over five years. The projected cuts grow from $7 billion in 2018 to $13 billion in 2019, $20 billion in 2020, $29 billion in 2021 and reach $40 billion in 2022, Avalere found.

“And it gets dramatically larger in the out years, so it’s probably around four times that for the 10-year score. It gets bigger every single year,” said Caroline Pearson, senior vice president at Avalere.

This story was originally published March 7, 2017 at 7:37 PM.