Feds Threaten to Withhold $1 Billion If Florida Doesn't Expand Medicaid

by | April 16, 2015

By Kathleen McGrory

Federal health officials turned up the pressure on Florida Tuesday, saying the future of $1.3 billion in federal funding for hospitals that treat low-income patients is tied to whether the Legislature expands Medicaid.

In a letter to Florida's Medicaid director, a top federal official wrote that the federal government is willing to consider the state's request to keep the so-called Low Income Pool (LIP) in place after the program ends in June. But U.S. Centers for Medicare and Medicaid Services Acting Director Vikki Wachino noted "the state's expansion status is an important consideration in our approach regarding extending the LIP program."

Senate President Andy Gardiner, R-Orlando, said the correspondence highlighted "the need to consider a comprehensive Florida solution."

"Time is of the essence," he said. "The Senate remains open to meeting at any time to discuss our free-market approach to expansion or any alternative the House or governor would like to propose."

But House Speaker Steve Crisafulli, a leading opponent of Medicaid expansion, said LIP and expansion should not be linked, and blasted the federal government for holding Florida hostage.

"It is unthinkable that they would leave our state on the hook for over a billion dollars simply because they want a specific policy outcome," said Crisafulli, R-Merritt Island, in a terse statement.

The letter and reaction from House and Senate leaders is only the latest salvo in a nasty feud between Washington and Tallahassee about LIP and Medicaid expansion -- two issues that have all but paralyzed lawmakers with only weeks remaining in the 60-day session.

If the federal government does not agree to continue the LIP program -- or declines to approve a successor program -- the Legislature would be forced to use general revenue to plug the budget hole, meaning tax cuts might no longer be possible. If not, safety-net hospitals across the state, including Jackson Health System in Miami and Tampa General, would face dramatic cuts.

The Senate has said expanding Medicaid would help hospitals shoulder the potential loss of funding, since fewer uninsured patients would be showing up in their emergency rooms. Medicaid expansion alone, however, would not be enough to offset the loss of LIP.

The letter came on the same day that business leaders, public health officials and consumer advocacy groups stormed the Florida Capitol to advocate for expanded coverage.

Joan Alker, a nationally recognized Medicaid expert and executive director of the Georgetown University Center for Children and Families, presented new research showing that 28 percent of Florida parents are uninsured, as compared to 20 percent nationwide. Expanding Medicaid, she said, would "allow them to be better parents, and help their children to succeed in school and life."

Later, representatives from the influential business lobbying group Associated Industries of Florida, the Florida State Hispanic Chamber of Commerce and the Greater Fort Lauderdale Chamber of Commerce made a different case for expansion. They said Florida businesses were likely to pay a combined $253 million in tax penalties for not providing health insurance for full-time employees -- in part because coverage had not been expanded.

"This is the solution Florida's business community has voted for," said Julio Fuentes, President and CEO of the Florida State Hispanic Chamber of Commerce.

A third group -- a national nonprofit working to empower young people called Young Invincibles -- was planning to hold a rally in the Florida Capitol on Wednesday.

Still, with less than three weeks to go in the legislative session, Medicaid expansion faces dimming odds in Florida.

The Senate is advancing a plan to use more than $2 billion in federal Medicaid expansion money to extend private health care coverage to about 800,000 low-income Floridians. Unlike Medicaid expansion as envisioned under the Affordable Care Act, the proposal calls for Florida to create a state-run marketplace available to residents who meet a work requirement and pay small monthly premiums. It would need approval from the federal government.

The Senate has billed its proposal (SB 7044) as a "free-market solution" to Medicaid expansion. But the plan has failed to find support in the more conservative Florida House, which fears the federal government would renege on its commitment to continue funding.

"The truth is, if one chamber is unwilling to do something, it's not going to happen," said former House Speaker Will Weatherford, a Wesley Chapel Republican who opposed an effort to expand Medicaid in 2013. "I don't see any way for them to bring it in for a landing in the next 20 days."

The ideological clash has brought the budget-building process to near halt, and put other high-profile proposals in jeopardy.

Tuesday's flare-up stands to further strain relations between House and Senate.

In his statement, Crisafulli slammed the Senate for "providing inaccurate and false hope" to during a meeting with CMS in Washington last month, and accused senators of having "muddled negotiations" on LIP.

Senate Health and Human Services Appropriations Subcommittee Chairman René García, R-Hialeah, said the Senate had acted in good faith.

"We have been upfront and truthful from the beginning," García said. "We knew were going to have this crisis on our hands, so we came up with a new LIP model and a plan to expand coverage."

The letter could also ratchet up tensions between Republican Gov. Rick Scott and CMS.

Scott has repeatedly said the agency has suspended negotiations with Florida -- a claim he repeated to reporters Tuesday afternoon.

He also repeated doubts about the federal government that led him to reverse his position on Medicaid expansion last week.

"CMS has a program, LIP, for low-income families, for medical schools, and they are walking away from it," Scott said. "And that same group says, 'Oh, do more business with us.' No one would do that in their personal life. Why would we put taxpayers on the hook for something when we can't trust the federal government to fulfill a program they already started?"

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