Report: Fla. could save money expanding Medicaid

Published: Thursday, November 15, 2012 at 4:39 p.m.
Last Modified: Thursday, November 15, 2012 at 4:39 p.m.

MIAMI — A health report released Thursday estimates the state could expand its Medicaid coverage to more than 1 million residents without spending additional money by offsetting costs in state-funded hospital programs and other safety nets.

The study by Georgetown University Health Policy Institute comes days after Gov. Rick Scott softened his staunch opposition to the federal health care law, signaling he wants to explore setting up a state health exchange and expanding the Medicaid rolls.

Researchers said the state could save up to $100 million a year by offering Medicaid coverage to more residents by scaling back on state-funded mental health and substance abuse service programs and other hospital safety net funds, arguing that patients won't have to rely on them as much if they already have health insurance. The report estimates between 800,000 and 1.3 million Floridians could qualify for coverage if the state expands its rolls.

The Obama administration wants to make more low-income Floridians eligible for Medicaid and is offering to absorb the cost for the first three years and pick up 90 percent of the tab after that.

Under the new state exchanges, Floridians and small businesses can shop for health insurance from a virtual marketplace. The state can run the exchange on its own, join federal health officials in a partnership or allow the federal government to handle it completely. Top lawmakers sent a letter Thursday to Health and Human Services Secretary Kathleen Sebelius saying they hadn't made a decision about whether the state will run the exchange because they don't have enough information. The letter also noted the state can't make a decision until the Legislature reconvenes in March.

But Georgetown experts warn that even with the new health exchanges, tens of thousands of Floridians will be left without insurance or Medicaid coverage starting in 2014 if the state chooses not to expand its rolls. That's because Florida already has some of the most stringent eligibility requirements in the country for Medicaid. A family of three with income of $11,000 a year makes too much and single residents are not covered.

Scott says he wants to work with federal officials on a solution but he's still concerned about where the money is going to come from to pay for Medicaid and whether tax hikes would be needed to fund it.

"I want to sit down and have good conversation to figure out if we can do an exchange, is there some way we can deal with the Medicaid expansion," Scott told The Associated Press this week.

An expansion would require additional costs, including an increase in payment rates for primary care services. Florida has one of the lowest Medicaid reimbursement rates. The federal government would pay the entire cost of the new Medicaid reimbursement rate, which would bring it in line with higher Medicare reimbursement rates. That could cost the state about $375 million a year, according to the Georgetown report.

Florida's Medicaid program currently costs more than $21 billion a year, with the federal government picking up roughly half the tab. It covers nearly 3 million people — about half are children — and consumes about 30 percent of the state budget.

In an effort to cut costs, the state has been trying to privatize Medicaid — rather than having government insurance, patients would be assigned to for-profit insurance companies, which would receive a per-person fee from the state and decide what services and prescriptions to cover. Federal officials have yet to sign off on the proposal.

If Scott and the Republican-led Legislature decide to expand the Medicaid rolls, the new patients would fall into the privatized proposal.

"I want to really get to the bottom of what's it's going to cost to do the expansion," Scott said.

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