Florida Gov. Rick Scott (R) announced his administration will file a lawsuit against the federal government for threatening to withhold more than $1 billion in Low Income Pool (LIP) funding for hospitals if the state fails to expand Medicaid.
LIP was created to replace supplemental hospital payments when the state moved from a fee-for-service system to reformed Medicaid managed care. Florida officials agreed to move $1.2 billion in other Medicaid funding into LIP as part of waiver negotiations with the federal government in 2014. According to state data, Medicaid payments cover 62 percent of hospital costs, and with LIP funding, 95 percent of costs are covered.
“What the Washington[,DC] officials and Centers for Medicare and Medicaid Services are saying is if you expanded Medicaid, then you would have less of a need for low-income pool funding,” said Thomas Miller, a resident fellow at the American Enterprise Institute. “But that’s questionable because it’s not typically good care and it’s not particularly well funded.”
Obama Leveraging States
A Florida Senate bill would require the state to cover 10 percent of the Medicaid expansion cost, or $5 billion.
Scott and most of the Florida House are resisting any legislation that expands Medicaid since the U.S. Supreme Court decision in National Federation of Independent Business v. Sebelius made expansion optional, Miller says. In this 2012 Affordable Care Act (ACA) case, Chief Justice John Roberts and Justices Samuel Alito, Stephan Breyer, Elena Kagan, Anthony Kennedy, Antonin Scalia, and Clarence Thomas found the Medicaid expansion provisions were written unconstitutionally. They concluded Congress does not have authority to threaten a state with complete loss of federal funding of Medicaid if the state refuses the expansion.
“Politically, this suggests that [although] there are some limits in resisting Medicaid expansion by states, it doesn’t work that well for the Obama administration to use this type of money to leverage and coerce … the states to this type of expansion,” Miller said.
Twenty-one states have rejected the expansion, and the Obama administration is sending a clear sign to other non-expansion states they’re willing to bully and basically blackmail state lawmakers to get what they want, says Nicholas Horton, a policy impact specialist at the Foundation for Government Accountability.
“All the while, they’re telling these same state lawmakers how much ‘flexibility’ they’ll give them if they’ll just agree to expand,” Horton said.
Costs ‘a Nightmare’
If Florida were to expand Medicaid, nearly 1.3 million people would enroll, according to the National Center for Policy Analysis. Horton says he considers this a low estimate based on the experience of other expansion states.
“The costs are unsustainable and unpredictable,” Horton said. “It’s just a nightmare all the way around for taxpayers, for the needy, and for state lawmakers.”
The Obama administration’s push to force Medicaid expansion may hit Kansas and Texas later this year, when their LIP funding waivers will be up for reauthorization.
Miller says LIP funding represents a significant amount of the resources available to provide assistance to low-income individuals not covered under Medicaid.
“There’s a lot of pressure and angst over the [potential] loss of those resources, which people had assumed would continue in the future for a number of years,” Miller said. “Both sides are probably moving closer to finding some common ground, but there is a short amount of time and a lot of polarized atmosphere surrounding this.”
Jehadu Abshiro ([email protected]) writes from Dallas, Texas.
Devon Herrick and Linda Gorman, “An Economic and Policy Analysis of Florida Medicaid Expansion,” National Center for Policy Analysis, Policy Report No. 347: http://www.ncpa.org/pdfs/st347.pdf