Florida can save millions by accepting federal Medicaid funds, state agency says

State lawmakers may have overlooked more than $430 million in yearly savings for Florida taxpayers by not accepting the federal dollars promised through the Affordable Care Act.

The savings, says the Medicaid director at Florida’s Agency for Health Care Administration, come from the administration’s pledge to pay the full cost for adults who now depend on the “Medically Needy” program. These are people with serious illnesses who cannot pay for their treatment.

Last month, when state budget analysts studied the cost-benefit of expanding Medicaid to cover one million low-income uninsured Floridians, they had to leave out savings from “Medically Needy” because they didn’t know whether federal health officials would offer full funding for adults now in that program.

AHCA this week released the report about the Medically Needy program to Health News Florida on request. In a telephone interview Thursday, Florida Medicaid Director Justin Senior said he received the news about the full funding for Medically Needy on Wednesday. He declined to name the high-ranking federal official.

In the current contentious legislative healthcare debate, news of the savings might appear to be a game-changer. But it isn’t clear whether there is time to digest the information, with just three weeks remaining in the session, or whether it will matter.

The Republican-dominated House and Senate are currently in a standoff over whether to accept federal funding.

House Republicans on Thursday proposed a bare-bones alternative to expanding Medicaid, bypassing billions of dollars in federal aid. It would cover up to 130,000 disabled adults and adults with minor children, far less than the estimated one million Floridians who could be covered by federal money. Enrollees would be offered $2,000 a year in state assistance to help them purchase insurance on a state-run health exchange. It would cost the state as much as $237 million annually. Gov. Rick Scott opposes the House plan because it is a waste of money since the federal funds are already available, “a double-hit to taxpayers.”

The Senate is weighing an alternative that would use the federal money to subsidize private healthcare coverage. State Sen. Joe Negron pitched a plan, Healthy Florida, that would allow the state to accept federal funds to subsidize private coverage for more than one million uninsured low-income Floridians. The Obama administration has hinted that it would accept that substitution.

Neither chamber is considering expanding Medicaid as the federal government initially anticipated. Scott has recommended to the Legislature that it take the federal money.

Senate President Don Gaetz was unavailable for comment, but his spokeswoman, Katie Betta, said his office learned Friday from AHCA about the full federal coverage.

“We certainly appreciate the federal government providing this clarification as it provides information that is helpful in our evaluation of the two alternatives to traditional Medicaid expansion currently pending in the Senate,” she said. “Both plans will be considered by HHS Appropriations on Wednesday.”

The House does not want to accept the federal funds, which legislative budget analysts estimate would amount to more than $50 billion over a decade. The first three years of expanded coverage would be fully federally funded under the health law, and then the state would be expected to kick in a small percentage, peaking at 10 percent in 2020.

But the projected savings from the feds picking up the cost of the Medically Needy would more than cover the first decade of Medicaid expansion under the Affordable Care Act, says Amy Baker, director of the Florida Legislature’s Economic & Demographic Research Office.

If AHCA and Baker are correct, it would actually cost state taxpayers less to cover one million uninsured low-income Floridians than it would to leave them uninsured. And it would cost a lot less than the House plan, which would provide coverage to many fewer people: 115,000.

House Speaker Will Weatherford, R-Wesley Chapel, has said he doesn’t trust the federal government to keep its commitment because of the need for budget cuts in Washington.

The House plan was developed by Pasco Republican Rep. Richard Corcoran of Land O’Lakes. His Florida Healthy Choices plan offered a list of reasons why Medicaid is not a good program and says those enrolled are deprived of their freedom.

State records show Florida currently pays 42 percent of the cost for the Medically Needy program, more than $430 million a year out of state general revenue.

If Florida agreed to accept federal Medicaid expansion funds, the adults who are currently in Medically Needy would be covered by private subsidized insurance, either through the Senate plan or the federal health exchange. Children who are in the Medically Needy program would remain there, according to the AHCA.

Several private research groups have previously forecast that expanding Medicaid would lead to savings, including Georgetown University’s Health Policy Institute.

“Our study found the state could generate significant savings by accepting federal dollars covering people up front with primary and preventive care, rather than waiting for them to bankrupt themselves and show up in the hospital,” said Georgetown’s Joan Alker, who co-authored a report on Medicaid expansion savings. “The state is now actually showing even greater savings than we initially estimated.”