Health News Florida
1:44 pm
Thu November 15, 2012

Florida Medicaid Expansion Would Pay Off, 3 Studies Say

Florida could gain a badly-needed economic boost and thousands of new jobs each year if state officials accept federal funds to expand Medicaid, three new studies say. One study calculates the payoff at 16-to-1.

The studies -- two by university researchers, one by a hospital association -- all took a decade-long view of the fiscal impact of enlarging Florida's health program for the poor. All found a significant net gain.

"The state can actually both save money and serve an additional million Floridians -- both adults and children -- by making the choice to extend their Medicaid program," said Joan Alker of Georgetown University's Health Policy Institute,  co-author of one of the studies.

Opponents of accepting the federal funds say they don't believe the expansion would yield the economic benefits the studies claim. And they say it's a waste of taxpayers' money at a time of deficit-cutting.

"To present this as a 16-to-1 return just neglects the reality that this is all deficit spending money that eventually we’ll have to pay back," said Tarren Bragdon, CEO of the Foundation for Government Accountability in Naples. "It’s not some magical money that they’re printing in Washington.”

But Alker said the money flows to Washington from Floridians, and this is an opportunity to get some of it back.

"If Florida decides not to take up this generous offer of federal funding, Florida taxpayers will be at a double loss," Alker said. "We believe this would be a very hard offer to turn down."

'Fuzzy math' and 'ObamaCare'

If there is so much to gain economically from a Medicaid expansion, then why did state officials keep warning that it would blow a hole in the budget?

"Florida officials had some very inflated estimates of what this would cost the state," Alker said. The August revenue estimates were more realistic, she said, "but their math is still fuzzy because they haven't accounted for savings that will accrue" when most of those now uninsured will have public or private coverage.

Ideology may have colored the estimates. Until this week, Gov. Rick Scott and the Legislature had said no to everything connected to the Patient Protection and Affordable Care Act, including the opportunity to expand the Medicaid program to cover more of the working poor. The state turned down millions of dollars' worth of grants related to the ACA.

While ruling the Act constitutional, the court made an exception: Congress cannot require the states to expand their Medicaid programs as a condition of continued participation.

Florida lawmakers had expressed hope they wouldn't have to make that decision, that the election would bring a Republican president and majority in both chambers of Congress. But with the re-election of Pres. Barack Obama, Florida officials have signaled a willingness to negotiate with the U.S. Department of Health and Human Services (HHS).

On Wednesday night, Scott's spokeswoman Jackie Schultz released a statement that read: “Gov. Scott wants to work with HHS to identify health care solutions that are good for Florida families by reducing cost and improving quality and access in health care."

Schultz said Scott "has said that just saying ‘no’ is not an acceptable answer and he looks forward to having a conversation that is solution-oriented."

Whether to expand Medicaid is one of two major decisions that faces Scott and lawmakers as they organize for the 2013 legislative session. The other is whether Florida wants to play a role in developing a health exchange where the uninsured can shop for coverage beginning Oct. 1, 2013.

If states choose not to participate, their residents will have access to a federal health exchange, under the ACA. States' decisions are due on Friday; some lawmakers have hinted they favor a partnership arrangement, but the governor's office has not released information on that yet.

Meanwhile, the health-care industry and patient advocates remain focused on whether Florida will expand its Medicaid program to cover adults when family income is under 133 percent of the poverty level ($25,390 for a family of three).  

The expansion would capture many adults who work in low-wage jobs, including parents of children now covered by state programs. Under current policies, Florida Medicaid covers only nondisabled parents with incomes at or below 20 percent of the poverty level, $3,813 for a family of three.

No net cost for expansion: Georgetown

Even if Florida says no on expansion, the state Medicaid program is expected to add up to 750,000 people -- two-thirds of them children -- who already qualify for Medicaid but have never been enrolled. Because they already qualify for Medicaid under current rules, they will not bring the 100 percent federal funding but will draw the usual match, which State Health Facts reports is 56 percent this year and 58 percent next year.

If Florida says yes to expansion, coverage would be available to an extra 1-million of the state's nearly 4-million uninsured (the Georgetown study offers a range of 800,000 to 1.3 million).

The major message from the Georgetown study, Florida's Medicaid Choice: Understanding Implications of Supreme Court Ruling on Affordable Health Care Act, is that the cost of expansion over a decade will be more than offset by savings. The state will save so much money that is now being spent that it should even cover the cost of those who already qualify but have not enrolled, the report says.

"In fact, overall state costs may well be reduced by an estimated $100 million per year because some safety net programs will become less necessary" with implementation of the Act, the report says.

The authors said Florida Medicaid's spending will go down dramatically for Disproportionate Share of Hospital funds -- DSH, often called "Dish" funds -- that now go to hospitals for care of the uninsured. Other savings they identified would come from mental health and substance abuse programs that now treat many of the uninsured.

Alker was co-principal investigator for the study, along with Jack Hoadley. Laura Summer also worked on it.

Economic impacts of expansion

While the Georgetown study looked only at spending within the health-care system, the other two studies calculated overall community impact that accompanies an economic stimulus.

Two University of Florida researchers from the Food & Resource Economics Department, Alan W. Hodges and Mohammad Rahmani, produced a report sponsored by the Florida Hospital Association. (Hospitals stand to suffer great losses if Medicaid doesn't expand, in that they will lose their DSH funds but will still have to treat the uninsured.)

The UF study, titled "Economic Impacts of Affordable Care Act in Florida," concluded that over the coming decade federal funds coming into Florida would have a huge ripple effect. They forecast federal revenue of over $24 billion, industry revenues of $71 billion, payroll of $31 million and $2.6 billion in indirect business tax.

They calculate that over the decade Medicaid expansion would add about 54,000 permanent jobs.

Another hospital-funded study comes from the Safety Net Hospital Alliance, which represents the interests of 14 public and non-profit hospitals that treat a larger-than-average share of the uninsured. The author, who is employed by the alliance, is James Zingale, a former Florida budget analyst.

Zingale calculated that the federal revenue coming into Florida over the next decade would be $27.8 billion, while the matching funds required would be just $1.7 billion. "Florida would see a 16-to-1 return on its investment," Zingale said.

Terren Bragdon of the Naples conservative think-tank says he doesn't believe the state would ever see the money.

Given the deficit and pending budget cuts in Washington, he said, "It's not fair to put patients and taxpayers at risk based on this empty promise from the federal government that they will supply this endless bucket of money for Medicaid expansion."

--Health News Florida, journalism for a healthy state, is a service of WUSF Public Media. Question? Comment? Contact Editor Carol Gentry at 813-974-8629, or at cgentry@wusf.org.

Joan Alker of Georgetown University's Health Policy Institute.
Joan Alker of Georgetown University's Health Policy Institute.