Health News Florida
9:40 am
Tue January 8, 2013

Legislative Analysts Told Scott His Medicaid Estimates Are Wrong (But He's Using Them Anyway)

Gov. Rick Scott and HHS Secretary Kathleen Sebelius met Monday
Gov. Rick Scott and HHS Secretary Kathleen Sebelius met Monday

The state’s chief economist has warned the staff of Gov. Rick Scott that his Medicaid cost estimates are wrong, but Scott keeps using them anyway, according to a series of e-mails obtained by Health News Florida.

Scott says he opposes expanding Florida Medicaid because it would cost too much: $63 billion over 10 years, he says, with the state paying $26 billion of that.

But those numbers are based on a flawed report, state budget analysts say. A series of e-mails obtained by Health News Florida shows the analysts warned Scott’s office the numbers were wrong weeks ago, but he is still using them. He cited them in a Tampa Bay Times op-ed on Sunday and at at a Washington press conference on Monday (see YouTube video).

The flawed report, “Estimates Related to the Affordable Care Act,” was sent to members of the Legislative Budget Commission on Dec. 17.

Three days later, two of the recipients pointed out the faulty assumptions and sent it back to AHCA for a do-over.  They said it would violate Florida law to proceed with the estimate.

Anway said he doesn't believe the federal funds will come through. "The federal government has a $16 trillion national debt, must borrow 46 cents of every dollar it spends, and in 2011 had its credit rating downgraded for the first time in history," he wrote in explanation.

But Michael Anway, Scott’s new coordinator for health policy and budget, sent an e-mail Friday to the others saying he will submit the original estimates  as an “alternative forecast” when the revised AHCA report comes before the next budget estimating conference.

Anway said he doesn’t believe the federal funds will come through. “The federal government has a $16 trillion national debt,  must borrow 46 cents of every dollar it spends, and in 2011 had its credit rating downgraded for the first time in history,” he wrote in explanation.

Anway joined Scott’s staff in early December after working for members of Congress, then for the Pharmaceutical Research and Manufacturers of America, or PhRMA. The Center for Responsive Politics' web site Open Secrets.org names Anway on its list of people in the “Revolving Door,” who go from the government to industry lobbyist and back.

The AHCA cost estimates sent out in December came from the staff of Tom Wallace, Medicaid finance chief, the e-mails showed. The estimates immediately raised eyebrows because they had tripled since August.

AHCA spokeswoman Michelle Dahnke said the estimates were updated after rules for the Affordable Care Act were released by the U.S. Department of Health and Human Services.  

However, a closer look at the assumptions on which the calculations were based showed that the estimates zoomed mainly because AHCA decided not to count the increase in federal funds included in  the Affordable Care Act.

The Act says the federal government will pay the lion’s share of the cost for new Medicaid eligibles if a state agrees to expand its program – a decision the Supreme Court left up to the states. The federal contribution for the new eligibles would be 100 percent between 2014 and 2016, then would taper after that to 90 percent by 2020 and stay there. 

But the AHCA report assumes the federal match for the new patients would be much lower, about 58 percent. It came up with that by averaging the match amount over the past 20 years.

The report doesn’t say why the authors made that assumption. AHCA declined multiple requests to interview Medicaid officials familiar with the reasoning.

According to the e-mail trail, the first state official to call the AHCA estimates into question was   J. Eric Pridgeon, on the staff of the House Health Care Appropriations Subcommittee. On Dec. 20, he wrote to Wallace that the federal revenues for Medicaid expansion states are part of the Affordable Care Act and therefore can’t be omitted without breaking Florida law.

Amy Baker, director of the Legislature’s Office of Economic & Demographic Research, agreed with Pridgeon and asked Wallace to redo the report.

As Health News Florida reported on Dec. 21,  the AHCA estimates were huge in comparison to a study released by the Urban Institute and Kaiser Family Foundation, two neutral research groups that specialize in Medicaid studies. Their study estimated that if Florida expands Medicaid, the 10-year cost to the state would be around $8.9 billion, and about 1.6 million more people would be covered.

That cost might be an overstatement, the authors said, since they did not account for savings to state and local governments that now spend on care for the uninsured.

Two other recent studies, by Georgetown and University of Florida researchers, found a net gain to the state from Medicaid expansion.

--Health News Florida, journalism for a healthy state, is a service of WUSF Public Media. Carol Gentry, Editor, can be reached at 813-974-8629 (desk) or 727-410-3266 (cell), or by e-mail at cgentry@wusf.org.