Florida Legislature’s Medicaid Folly

The Florida Legislature is about to make final decisions about the state’s budget in the next few weeks – decisions that are constructed on false fiscal assumptions — with reckless options on the table that would weaken the state’s health care system and lead to more uninsured Floridians if finalized. During what we all hope are the final throes of a dire pandemic, legislators are gambling with Floridian’s current and future health – and one must assume that they are doing so for purely political reasons.

The Florida House and Senate have each passed their own budgets and started negotiations over the weekend to make final decisions. Included among the proposals that passed each body are some shocking and terrible ideas as the state struggles to recover from the health and economic consequences of the pandemic. Over the weekend, Senate negotiators presented their first offer to the House and restored some of the cuts that were passed by the full Senate.

And of course, what has not included: Medicaid expansion. The state is refusing to accept increased federal funds available to non-expansion states like Florida to expand Medicaid, which would result in a net gain to the state of $1.8 billion over two years according to the Kaiser Family Foundation. Yes, that is billion with a b. Expanding Medicaid would cover approximately 790,000 uninsured Floridians. So the state could help its budget enormously and save lives by going in this direction. But that appears to not be on the table this session.

Instead, the Senate has proposed to cut off 19 and 20-year-olds from their current Medicaid coverage. If this were to happen, many of these young people would likely become uninsured.  At 13.2 percent, Florida’s uninsured rate is already considerably higher than the national average. The Senate has also proposed cutting off vision, hearing, podiatry services among other benefits for adults, and making substantial cuts to hospital funding as well. The House budget includes cuts to nursing home funding.

Threatening to cut off these young people is clearly cruel, but it was also mystifying for quite a few reasons. This would be a double violation of federal maintenance-of-effort requirements –  the first violation relates to the Families First Act that prevents states from taking the enhanced 6.2 percentage point increase in the federal share of Medicaid costs during the current public health emergency (PHE) from restricting eligibility. Medicaid costs are shared by the federal and state governments with the feds paying a bigger share. During the COVID public health emergency, this “bump” in the federal matching rate is reducing Florida’s share by 16.3%, as I discuss in greater detail below.

And as our brief on the Families First Act points out (see p. 2), states are already prohibited from lowering eligibility for children before 2027 as a consequence of pre-existing federal law. Children are defined as under age 21 in states like Florida, which chose to extend coverage to these young people many years ago. So the state would lose not only the current 6.2% matching rate bump but would also lose all federal Medicaid funding. Obviously a non-starter — so what was the point of threatening to take away these teenagers’ health insurance?

Meanwhile, in a sliver of good news, the Florida House included a provision to extend Medicaid coverage for 12 months postpartum to women who give birth – many of whom no doubt would be covered before, during, and after their pregnancy if the state expanded Medicaid (and some of whom might fall into the 19- and 20-year-old age group that the Senate is trying to kick off of Medicaid). The Senate has now responded with an offer to go to six months of postpartum Medicaid coverage.

We at CCF are big backers of extending postpartum Medicaid coverage, but it is critical to view its adoption in a wider context. And the wider context in Florida is not pretty – at the same time, the Senate’s budget cut funding for Healthy Start by 2/3– which has been working for years to reduce racial disparities and improve maternal and infant health. And according to news accounts, the new state postpartum option (at regular match – not the enhanced expansion match) would be funded by huge reductions (over $500 million) in Medicaid payments to hospitals.

Florida State Senator Aaron Bean claims these are “tough choices,  but the question is are these “tough choices” necessary? In a word, “no”. The Senate has already backed off some of them, and rightly so. They are being driven by false budget assumptions.

Currently, as regular readers of SayAhh! know, the federal government is paying an additional 6.2 percentage point share of Medicaid costs. This reduces the state’s Medicaid cost by 16.3 percent for the duration of the COVID-19 public health emergency. The additional FMAP is tied to the duration of the PHE, which is extended in 90-day increments by the Secretary of HHS. The legislature’s budget assumes that Secretary Becerra would terminate the public health emergency this week.

We are all well aware that COVID-19 has not gone away this week when Secretary would be making the decision. And this false assumption becomes demonstrably false when Secretary Becerra extended the PHE today. But even before the Secretary took that action, it was already quite clear that the Biden Administration has no intention of lifting the PHE anytime soon. In fact, one of the first things the Biden Administration did upon taking office was to send a letter to all Governors informing them of their intention to extend the PHE through the end of the calendar year and possibly beyond. The purpose of the letter was to allow for states to plan their budgets with more predictability:

“To assure you of our commitment to the ongoing response, we have determined that the PHE will likely remain in place for the entirety of 2021”

As my colleague Tricia Brooks explains in a blog, this means that states can count on having that extra 6.2% match through three-quarters of the state budget cycle that the state legislature is currently debating. The state’s estimating conference, however, assumes that the federal Medicaid matching assistance percentage (FMAP) will return to its regular rate starting July 1, 2021. With today’s extension of the PHE that is already the wrong assumption.

And by the way, the state’s official budget forecasters recently issued a revised estimate of anticipated revenues with an increase of over $2 billion largely based on a quicker recovery than expected in the Sales Tax.

So these are false choices indeed – and it is clear that some of them will be reversed during the conference committee. But why is this false narrative being pursued? That is a question for Floridians to ask their elected officials.

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