For the first time in 12 years, Florida ended its regular session without a state budget, prompting legislators to reconvene — starting Monday — to finish the work.
But in a fitting nod to the atmospherics, the opening day of the three-week special session is also the official opening of the hurricane season — and the health care debate that sidetracked the state’s $80 billion budget debate continues to spawn political storms.
As of Friday, legislators did not have agreement on the size of the health care-induced budget hole, which means they can’t start budget negotiations. They don’t agree on how to craft a long-term fix to provide health insurance to the uninsured.
They agree tax cuts are good. But, because of the health care conflict, they don’t agree on how much they can afford this year. And the question of how much money to direct to Amendment 1, the water and land-buying initiative approved by 75 percent of voters last fall, is mired amid discord over whether to use it to buy land to clean the Everglades.
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“We know how to get this done from where we are. It just may require a lot more compromise,’’ said an optimistic Sen. Tom Lee, R-Brandon, the Senate Appropriations Committee chairman.
Rep. Richard Corcoran, R-Land O’Lakes, House Appropriations Committee chairman, believes there is middle ground. “We’re all in agreement we’ll get a budget,’’ he said. “What we don’t agree on is how much flexibility to give each side to get there.”
The session begins at 1 p.m. Monday. The House will begin by scheduling a hearing on the Senate’s health insurance reform plan called the Florida Health Insurance Exchange, or FHIX — something it refused to do during the regular session.
The schedule then calls for meetings to continue throughout the week, with the Senate agreeing to take up a series of House proposals aimed at containing health care costs. Budget conference meetings between the House and Senate are set to start as early as next weekend. They must approve a final budget before June 30.
The conflict now is over whether to use the state’s surplus funds to soften the blow for hospitals that provide charity care for the uninsured under the Low Income Pool (LIP), or to finance tax cuts.
After warning Florida for more than a year that it was phasing out the LIP fund, the federal Center for Medicare and Medicaid Services announced May 21 that the state would get only $1 billion of the $2.2 billion it received last year. Hospitals warned that the lost revenue could reduce services and staff at hospitals that serve the uninsured.
Senate President Andy Gardiner said the loss of LIP money “will have a ripple effect throughout our entire budget, providing a renewed and elevated importance to the discussion of a Florida solution to coverage for the uninsured.”
Despite an intense push by consumer groups, business leaders, and a television ad campaign run by a consortium of hospitals and health care organizations, House and Senate leaders last week all but conceded they must focus first on passing a budget that includes the immediate need of resolving how to handle the lesser LIP dollars. Resolving the impasse over whether to expand Medicaid or create a private insurance alternative to Medicaid will likely have to wait.
“Let’s prop up the system and have the larger policy discussion in the interim,’’ Lee said Friday. “There may be a breakthrough as people see the budget implications. There may not be.”
The governor and conservatives in the House see any decision to accept federal Medicaid money as heresy to their smaller government values.
Senate Republicans want the federal money put into the privately-run FHIX exchange to help shift incentives for the uninsured from expensive crisis health care to lower-cost prevention in what it calls a “sustainable long-term solution.”
Meanwhile, the Senate tried to move away from traditional Medicaid expansion to get closer to the governor and the House, without getting too far out that it loses its chance for federal approval under the Affordable Care Act, or Obamacare.
Medicaid is the state-federal program that serves poor and disabled Floridians, and Obamacare allows states to draw down federal funds if it raises eligibility requirements to cover more people.
Last week, the Senate announced a major modification to its FHIX plan to provide health care coverage to as many as 800,000 low-income Floridians by allowing them to purchase subsidized private insurance from either a new state exchange or the federal exchange set up under the Affordable Care Act and paid for with Medicaid expansion money. The change increased the work requirements and co-payments and eliminated the short-term enrollment into Mediciaid.
But Scott said he “won’t do it” because he says the plan will “grow government” and raise taxes.
House Speaker Steve Crisafulli, R-Merritt Island, bashed the idea as a “costly and inefficient entitlement program to serve able-bodied working age adults with no children.”
The result, said Sen. Don Gaetz, a Niceville Republican and former Senate president, is that a vote is unlikely.
“The build up of distrust, and some of the harsh words and positions make a grand bargain difficult — especially when you have a gov who says ‘No, no, hell no,’’ he said. “Why put people in a position of voting on something they may include some nose-holders if the governor is going to veto?”
The latest tempest in the health care storm came last week when Scott proposed offsetting the loss of $1.2 billion in federal health care money using by hospitals that provide charity care by asking them to raise the funds to draw down federal money. The proposal relies on hospitals in local communities — like Miami Dade, Broward, and Hillsborough — with health care taxing districts.
Under the plan, the state would offset the loss of LIP money by relying on local hospitals and local governments to raise $900 million in financing to draw down $1.2 billion in federal funds.
As a return on their investment, hospitals would be rewarded a 10 percent profit — a cost of about $100 million. The state would then use another $1 billion promised by the federal government to reimburse teaching hospitals and increase patient reimbursement rates.
The proposal prompted complaints from the state’s “safety net” hospitals, which provide the bulk of the charity care. They warned that Scott’s idea would slash $302 million from their budgets and “could literally put some out of business.”
Jackson Memorial in Miami, for example, would put up $320 million of its tax money to draw down $490 million in federal matching funds — based on the 40/60 formula — and receive only $100 million. For-profit hospitals, whose policies aim to avoid serving the uninsured, would collect new revenues when they serve new Medicaid patients.
“We are urging the governor and his team to re-evaluate the harmful impacts of this proposed redistribution.” said Tony Carvalho, Safety Net Hospitals of Florida president in a statement.
Hospital officials in Miami Dade and Broward said they would not participate and Senate leaders noted that it does not meet the federal government’s requirements for having more patients insured. They all but rejected it.
“How are you going to convince local communities to finance health care system where they’re the net losers?’’ asked Lee.
The governor’s spokeswoman, Jackie Schutz, defended it as a fair compromise “that would keep hospital record profits almost entirely whole” and “only a handful of hospitals could not afford the cuts.
Scott’s proposal was motivated by budget pragmatics.
The state enjoys a $1 billion surplus over last year and the governor has signaled that his top priority is to use the new funds on tax cuts and increased money for public schools.
The loss of LIP money could imperil that goal if lawmakers do as the House proposed in the last week of the regular session and use $600 million in general revenue money to soften the blow for hospitals taking the biggest hit.
After remaining silent about the issue for months, the governor — a former CEO of the HCA hospital chain — called senators into his office in April and showed him a chart detailing operating margins at hospitals. He told some that any budget that passed without his tax cuts would be vetoed, and his message was that hospitals can afford to absorb the hit.
The governor’s staff then came up with a LIP plan that relies on no state money to fill the hole, and depends on local governments.
The new formula would need approval from the federal Centers for Medicare and Medicaid Services. Federal officials told the Herald/Times Friday that the proposal has not been approved and they have some concerns.
But the governor’s surprise proposal escalated tensions in the already tumultuous debate. Legislative tradition holds that, for a special session to be successful, leaders must have an agreement in principal on the issues before the accelerated pace of a special session begins.
Without agreement on how much general revenue to put into the health care budget to offset the cuts to hospitals, they can’t give budget writers their target amounts for crafting the $80 billion spending plan.
The Senate is prepared to use about $500 million to $600 million in general revenue to replace the federal money lost by hospitals to “stabilize” the system as they debate whether to implement a long-term solution that expands health insurance for the uninsured and draws down federal Obamacare funds to do it, Lee said.
“We want to find a way to keep hospitals whole in the current year while we are trying to work out these longer term solutions to the system,’’ Lee said.
Hospitals have their own suggestions for how to avoid cuts to patient care. Dr. Nabil El Sanadi, the CEO of Broward Health, which has the state’s second highest amount of uncompensated care, suggests the state should raise cigarette taxes to $1 a carton, generating what he estimates as $800 million in new revenue.
“We should put patients before politics,’’ he said.
The House won’t say publicly whether it supports the governor’s plan, but Corcoran said it is prepared to put aside a lump sum to resolve the LIP issue later in the year, or when lawmakers are back in session in January.
“Coming into the special session, all appearances are the Senate’s No. 1 priority is protecting the hospitals. The House’s No. 1 priority is we want tax cuts for the people,’’ he said. “We’re willing to compromise.”
Mary Ellen Klas can be reached at meklas@MiamiHerald.com. Follow her on Twitter @MaryEllenKlas