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Florida's Legislature, Not Its Governor, Will Determine Medicaid Expansion's Fate

February 25, 2013

By Avik Roy

There’s been a lot of coverage—including here—of the recent spate of Republican governors who have endorsed Obamacare’s expansion of Medicaid in their states. But, as Josh Archambault has noted, the media is missing a big part of the story: that no Medicaid expansion can take place without the explicit authorization of the state legislature. And in Florida, where Gov. Rick Scott (R.) made national news last week by reversing his opposition to the expansion, the Republican-controlled legislature remains very skeptical.

Is Rick Scott trying to have it both ways?

And it’s not only the legislature that has doubts. Tia Mitchell, who covers health care goings-on in Florida’s capital for the Tampa Bay Times, told MSNBC last weekend that she thinks that Gov. Scott is "getting the best of both worlds" by stating that he favors the expansion, while not pushing hard for the legislature to authorize it.

"Number one," said Mitchell, "he is not saying Florida will [expand Medicaid, but that] Florida should. He is being very careful to say, if the legislature does this, this is what I would sign. And that’s an important distinction…He gets to look pragmatic and you know that he’s moderating himself; he is running for reelection in about a year. However, he’s not saying he’s going to advocate for this, or, that it’s even going to make it more likely that it actually happens in Florida."

Republicans are in full control of Florida’s legislature. They control the House 74-46 and the Senate 28-12. For the Medicaid expansion to happen, all three parties—the House, the Senate, and the Governor—will have to approve it. "Gov. Scott has made his decision and I certainly respect his thoughts," said Florida House Speaker Will Weatherford in a statement. "However, the Florida Legislature will make the ultimate decision. I am personally skeptical that this inflexible law will improve the quality of health care in our state and ensure our long-term financial stability.

"The House of Representatives has a bipartisan select committee that is currently meeting regularly on this issue. I look forward to the recommendations that our select committee will bring forth in the next few weeks. I am confident that our actions will be based on principle and rooted in facts."

Gov. Scott’s Medicaid ’waiver’ isn’t finalized

Rick Scott made a big point of saying that the Medicaid waiver he received from the federal government was critical to his decision to endorse Obamacare’s Medicaid expansion. "Florida Wins 2nd Medicaid Waiver Granting Flexibilities," heralded a press release from Gov. Scott’s office.

However, no waiver has yet been granted. Instead, the U.S. Centers for Medicare and Medicaid Services has provided Gov. Scott with a letter describing an "agreement in principle," not an actual waiver. "We look forward to working with you further on these topics as part of our effort to reach a final agreement on the demonstration," concluded CMS Deputy Administrator Cindy Mann.

Whether or not the agreement in principle turns into an actual waiver, it’s implausible that the waiver was a big driver of Gov. Scott’s decision. While privatizing Florida’s Medicaid program would be a huge boon for for-profit Medicaid insurers—like WellPoint (WLP), Humana (HUM), WellCare (WCG), Centene (CNC), and Molina (MOH)—the efficiencies that these insurers would provide to the program won’t remove the significant fiscal risks that the expansion will entail.

Next steps in the Florida legislature

According to Tia Mitchell, Republican state legislators are well aware of these risks, "especially the Florida House, which is more conservative…I talked to several members last week, and they said, ’You know, we just don’t believe the federal government’s going to make good on its promises. This is deficit spending.’"

As Weatherford noted in his statement, both the Florida House and Senate have committees that focus on issues related to the health law. The House committee will next meet on Thursday, February 28.

Rep. Richard Corcoran (R.), who chairs the House committee, didn’t seem particularly excited by Gov. Scott’s announcement. "While today’s letter from the federal government on the progress of Florida’s Medicaid waiver is welcomed news, it does not influence the decision to expand Medicaid in our state," said Corcoran last Wednesday. "The House Select Committee on PPACA has and will continue to have separate discussions on that issue and will make a principled recommendation in the best interest of all Floridians."

Corcoran, who was Marco Rubio’s chief of staff when Rubio was Speaker of the Florida House, is himself in line to be Speaker in 2017. (According to custom, Florida House Speakers serve in single two-year terms, with a three-term succession planned in advance.)

When Mark Robitaille, incoming president of the Florida Hospital Association, appeared before Corcoran’s committee to lobby for Obamacare’s Medicaid dollars, legislators peppered him with skeptical questions, given the fact that hospitals lose billions of dollars treating Medicaid patients today.

"If Medicaid doesn’t cover the full cost of care today, wouldn’t expanding Medicaid just increase private insurance costs to pay the difference in the cost of care?" asked Rep. Matt Hudson, vice-chair of the select committee. "It seems almost incomprehensible to me that if you’re getting paid at less than the cost of your care, that you wouldn’t try to recoup that cost somewhere else." When members asked Robitaille why it wouldn’t be better to put eligible Florida beneficiaries on the ACA exchanges, with their higher reimbursement rates, Robitaille admitted he hadn’t studied the question.

Sen. Joe Negron, who chairs the Senate PPACA committee, seems more inclined to side with Rick Scott in favor of the expansion. "I respect the governor for staking out a clear position," he said on Wednesday. Negron told the Palm Beach Sun-Sentinel that he wasn’t particularly concerned that new Medicaid beneficiaries would have problems getting access to care, because the federal waiver that Gov. Scott has been promised will allow private insurers to manage the Medicaid program. "It’s their responsibility to have network adequacy," said Negron. "They’ll be responsible for making sure people can get care with network physicians."

Florida’s Medicaid program is one of the nation’s worst

Today, physician access is a huge problem for Florida’s Medicaid program. In 2011, 41 percent of Florida physicians refused to accept new Medicaid patients. That’s the third-worst ratio in the country, only behind California (43 percent) and New Jersey (60 percent). For every dollar a primary care physician in Florida received from someone with employer-sponsored insurance, in 2008 Medicaid only paid 44 cents. That, too, is one of the lowest rates in the nation.

While Obamacare’s supporters trumpet the fact that the law funds a temporary increase in primary care reimbursement rates, that increase only lasts for two years, and doesn’t cover physicians in other specialties. I’ve spoken to hundreds of physicians that see Medicaid patients, and not one has said that a temporary two-year bump in Medicaid rates will affect their decision to accept new patients.

Sen. Negron’s assurances that Medicaid insurers will be able to manage this problem are hard to fathom. These insurers will have to pay the rates that are set by the state, and raising those reimbursement rates would cost Florida billions of dollars that it doesn’t have. And we can be sure that these very factors are weighing on the minds of the state legislators who will decide Florida’s Medicaid fate.

The bottom line is that, contrary to media reports, the story of Obamacare’s Medicaid expansion in Florida is far from over. As Lee Corso, who played football in Tallahassee, likes to say on ESPN: "Not so fast, my friend."

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