Trump’s Farewell Gift to Florida’s Medicaid Program

Father and toddler son walking

A few days before departing, former CMS Administrator and Trump appointee Seema Verma handed out ten-year Medicaid demonstration waiver extensions for political allies, with Texas and Florida,[1] approvals being granted late Friday, January 15th. The Friday before (Jan. 8th) CMS had approved the infamous and dangerous Tennessee waiver, which my colleagues explained beautifully here.

Ten years you say? Is that normal? No – it is not. The statute clearly only allows for extensions of three years (demonstrations involving dual-eligibles can be extended five years). The Biden Administration’s lawyers will no doubt be looking at the questionable legality of this move although, unfortunately, they have a long list to review of potentially illegal waiver practices that Verma’s CMS engaged in.

Florida’s demonstration was not due to expire until June 30, 2022, but the DeSantis Administration submitted an early application to the federal government for a two-year extension on July 29, 2020. (Texas also was not due for renewal.) Rather than extending the waiver for two, three or five years, approval was granted for 9 ½ years – an idea that purportedly emerged from the public comments but has nothing to do with the purpose of Medicaid waivers to test experimental, pilot, or demonstration projects that promote the objectives of the Medicaid program.

But back to the substance of Florida. I have been following and studying Florida’s waiver for an embarrassingly LONG time.  Along with my Georgetown University colleague Jack Hoadley, I conducted a multi-year evaluation of its early implementation in Broward and Duval counties. The demonstration project has been around since 2005 under an agreement reached by then-President George W. Bush and his brother Governor Jeb Bush. (Yes, 15+ years is also an embarrassingly long time for a “pilot” project to be hanging around.) Originally designed to pave the way for managed care companies to take over Florida’s Medicaid program and, most alarmingly, decide what benefits adults would receive, the waiver has been modified over the years. The more extreme aspects of benefits “flexibility” fell away during the Obama years but managed care remained a central piece. An original smorgasbord of ill-conceived ideas to use public Medicaid funding to enroll children in private insurance, encourage healthy behaviors, etc. have mostly faded away over the past decade.

A constant over the years, however, is the existence of a Low Income Pool (LIP) — the stated purpose of which is to compensate safety net providers for uncompensated care furnished to uninsured individuals. Used primarily over the years by Florida’s safety net hospitals to help absorb the costs of treating large numbers of low-income uninsured patients, it has been a political football for many reasons – with too many twists and turns to chronicle here or even try to understand. Suffice to say that there are some who like it and some who don’t; and the list of which providers are eligible to seek funding from the LIP has grown over the years. This latest approval increases the amount of total funding available through the LIP to providers in Florida from $1.6 billion to $2.2 billion per year.

An important side note about the LIP: In 2019, the Office of the Inspector General issued an audit finding that there had been excessive payments to Jackson Memorial in Miami to the tune of $686 million over a period of four years. The OIG recommended that the state pay back $412 million to the federal government. As best as I can tell, this decision remains under appeal.

Despite the constant claims by the Trump Administration regarding their devotion to rooting out purported fraud in the Medicaid program, the midnight waiver approval does little more than mention the OIG’s findings in a footnote on p. 4.

Fundamentally, though, the important point about the LIP is that it does nothing to provide health insurance to the hundreds of thousands of Floridians who remain uninsured because the state has not chosen to expand Medicaid. Approximately 790,000 Floridians with incomes between 31% FPL and 138% FPL that are currently uninsured would be eligible for Medicaid coverage if the state adopted the expansion. As readers of SayAhhh! know, the state could receive 90% federal match to insure these Floridians and pay 10 cents on the dollar, but instead is choosing to pay 32 cents on the dollar (Florida’s regular match rate is 62% federal share) to not cover them.

The approval letter makes clear in multiple places that patients receiving LIP funded services are not Medicaid beneficiaries:

“LIP payments may be used by eligible providers to offset the uncompensated costs of treating the uninsured, but this expenditure authority does not make uninsured patients eligible for any benefits under the demonstration.”  (Page 5 of approval letter)

Florida has one of the highest uninsured rates in the country (19.5% for adults and 7.6% for children), and this midnight waiver approval does absolutely nothing to change that. In addition, the waiver rolls back retroactive eligibility[2] which puts patients and providers at risk for large unpaid medical bills and debt.

Many questions come to mind about why this inefficient policy was approved for ten years. Was it designed to placate providers who are carrying more of a burden of uncompensated care costs for uninsured patients than states that took the commonsense approach and expanded Medicaid — thereby reducing the number of uninsured and reducing uncompensated care costs? Probably. Does Florida want to continue to run an inefficient health care system where care is delayed and people with chronic conditions like hypertension and diabetes get worse and end up in the emergency room? I guess the legislature and the Governor will have to answer that.

[1] Florida’s behavioral health and supportive housing assistance pilot was extended for five years through June 30, 2025

[2] Retroactive eligibility: In 2018 the state received approval for a harmful waiver of retroactive eligibility for virtually all non-pregnant adults added to the demonstration approval. Data promised by the state to monitor the impact of this provision has not materialized, but the midnight approval extends it anyway, however,  its continuance is subject to another extension by the state legislature this spring. In the absence of state legislative action, the waiver of retroactive eligibility will expire on July 1, 2021. The state’s Medicaid agency AHCA is due to submit an impact report on this to the Governor and the Legislature by March 1, 2021



Joan Alker is the Executive Director of the Center for Children and Families and a Research Professor at the Georgetown McCourt School of Public Policy.