July 7, 2011

What currently poses a bigger threat to Florida’s health care safety net: legislative or congressional proposals to undermine the Medicaid program?  That’s actually a trick question, to which the answer is, unfortunately, a combination of state and federal threats.

Threats in Washington

With Republican proposals to undercut Medicare in Congress facing strong opposition, the pressure on Medicaid has only intensified. As the program providing health coverage for only the very poorest and often sickest children, seniors and people with disabilities – individuals with few resources and no political clout – Medicaid is a far easier target than Medicare.  

As a result, proposals that cut Medicaid and put Medicaid recipients at risk remain squarely on the table in Congress.  Among them:  the conversion of Medicaid to a "block grant" program (capping federal funding to states) and the elimination of the "maintenance of effort" requirement (allowing states to tighten eligibility).

And with a deadline on raising the federal debt ceiling looming, even President Obama has indicated a willingness to consider cuts to Medicaid as part of a compromise, perhaps trimming $100 billion from the program over the next decade.  The mechanisms discussed for exacting these cuts include a so-called "blended rate," whereby the various federal matching rates for different components of Medicaid and the Children’s Health Insurance Program would be replaced with a single statewide match rate. Although that may seem like a helpful simplification of Medicaid, it would facilitate an across-the-board federal funding cut, and perhaps even set the stage for a block grant.

Threats in Florida

Meanwhile, most states -- including Florida -- began new fiscal years July 1 amidst continuing recession-fueled budget shortfalls.  Because Medicaid is funded through a state-federal partnership and the federal stimulus funds have dried up, the Medicaid program has already been hit hard.  Although Florida and all states have great flexibility in running their Medicaid programs now, many governors, including Rick Scott, have been demanding more.

A block grant would provide that flexibility, but also shift more of the burden for sustaining Medicaid onto Florida. However, legislative leaders have blasted Congress for the burden Florida bears already, and they enacted major changes to Medicaid during the 2011 session in an effort to curb state spending on Medicaid.

Controlling state expenditures is the aspect of flexibility that seems of greatest importance to the legislature, as exemplified by the Senate’s proposed version of the recent Medicaid overhaul (although not the one ultimately approved by the full legislature). Under that proposal, the legislature would have been able to impose a Medicaid spending cap of its own. If state spending were ever on pace to exceed that cap, cuts to eligibility and benefits would be required.

However, Florida lacks the authority under current federal law to impose such a cap, which is likely why that was not part of the final version of the legislation. Rather, the legislation that did pass seeks to contain costs primarily by shifting patients into “capitated” managed care plans and giving those plans unique power to vary benefits, an initiative fraught with many pitfalls of its own.

The Compound Threat

In the months ahead, Congress could cap or reduce Medicaid funding, give states the flexibility to reduce their own spending, or both. In Florida’s case, any of those actions would snap Florida’s already strained Medicaid safety net, rendering the program unrecognizable.

For instance, states may provide coverage to individuals beyond what is considered the bare minimum under federal Medicaid law today, though only about 6 percent of Florida’s Medicaid spending is used to provide coverage above that minimum. So any significant flexibility given to Florida would be used primarily to cut into Medicaid eligibility in ways inconceivable until now. The (U.S.) House Republican budget plan calls for cuts of precisely that scale, slashing Florida Medicaid enrollment by 55 percent by 2021.

Floridians should recognize that any congressional or legislative action purporting to make Medicaid more flexible or predictable threatens services and eligibility for the most vulnerable Floridians, thousands of jobs, and tens of billions in economic activity.

Comments
Jess
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July 8, 2011 at 23:20
Interesting. I am curious as to the implications of this on Florida's elder population, which drives much of florida's in-migration economy.
Jason beck
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July 17, 2011 at 19:34
While I do not disagree that social services are necessary, how does a broke nation pay for them? The arguments the center presents in their work are advocacy pieces. I would like to read more financial solutions for preserving social programs.

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