Florida legislators resolved a second major budget linchpin Friday as they agreed on a formula for distributing more than $2 billion to hospitals for the cost of treating poor patients.
Working late into the night, they divided a huge pot of federal, state and local money among hospitals for charity care in the so-called low-income pool or LIP that is being scaled back by the Obama administration.
“It’s a huge step forward,” said Senate President Andy Gardiner, R-Orlando.
To make up for that federal cut, the state will set aside nearly $400 million for LIP in next year’s budget, eating up nearly half of a projected $1 billion surplus.
The largest recipients of low income pool money include Jackson Health in Miami, Broward Health in Fort Lauderdale, Tampa General and All Children’s Hospital Johns Hopkins in St. Petersburg.
Hospitals praised the preliminary agreement and said they were analyzing its effects.
“We are very grateful that Senate and House leaders recognize that the federal LIP funding that Florida is losing needs to be replaced with recurring state general revenue,” said Tony Carvalho, president of the Safety Net Hospital Alliance of Florida. “This state funding support is crucial to our hospitals’ ongoing mission of providing highly specialized health services to the state’s most vulnerable residents, regardless of their ability to pay.”
The new funding model requires approval by the full Legislature, Gov. Rick Scott and the federal government before it can take effect July 1.
The Legislature’s decision to use state tax revenue to subsidize hospitals is another potential setback for Scott, who opposed that method and wanted to rely on local property tax revenue that’s earmarked for health care, much of it raised in the state’s two most populous counties, Miami-Dade and Broward.
But Scott’s funding model would have meant bigger cuts to safety net hospitals, especially Jackson Memorial and Broward General Medical Center in Fort Lauderdale. In addition, the Legislature’s method uses recurring or permanent revenue that hospitals can rely on in future years.
Scott’s office is reviewing the proposal, spokesman John Tupps said.
The first lynchpin faced by the Legislature was an agreement on tax cuts. In behind-the-scenes talks with the House, the Senate has already advanced $400 million in tax relief for next year.
The budget that’s rounding into shape also will have less money for schools than Scott wanted and more modest tax cuts, though the Senate did propose a one-year repeal of taxes on college textbooks that the governor proposed.
The bigger tax cuts that Scott wanted are a casualty of the Legislature’s decision to shift state tax revenue to hospitals.
Facing a deadline of next Tuesday to complete work on a budget, the two appropriation chairmen — Sen. Tom Lee, R-Brandon, and Rep. Richard Corcoran, R-Land O’Lakes — and their staffs continue closed-door negotiations in other unresolved spending areas.
They include implementation of the land and water protection programs known as Amendment 1, divvying up money for college and university construction and approving and rejecting hundreds of hometown projects in lawmakers’ districts.
Miami Herald reporter Daniel Chang contributed to this story.