Florida's $11 Billion Medicaid Gamble

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Treating the public policy arena like a casino is never a good idea.

Florida is placing an $11 billion bet on Medicaid this year.  If the state loses, we’ll all be emptying our pockets for lower services.

The bet involves moving all Medicaid recipients to managed care.  As reported in an article by Jim Saunders in Health News Florida last week, passage of this legislation this year is as close to a sure thing as there is in government.

Florida hopes to save $1 billion the first year, and $2 billion by 2013 – nearly 10% of the total State Medicaid budget.

There are three problems with this calculation.

The first is that the projected savings from moving to managed care might be too high.  In a 2009 report prepared for America’s Health Insurance Plans, the Lewin Group found that savings in 24 different state Medicaid plans ranged from half of one percent to 20% after a switch to managed care.  Savings tended to be low at first, and most were still in the single digits after several years.

The second is that the savings will be offset by lost federal revenues, because the federal government will reimburse at least 55% of Florida’s Medicaid costs the next two years.  The actual savings to taxpayers is under $1 billion in FY2013, less than half of what the Governor and legislators are claiming.

The third problem is that to achieve these savings, Florida has to include elders and people with disabilities – who together account for 70% of Medicaid expenditures – in managed care.

To many people, “managed care” means the same thing as “care delayed or denied.” If $700 million of Florida’s Medicaid savings come from denying care to nursing home residents, cutting back on treatment services to people with mental illness, and delaying care for people with mental retardation, legislators fighting Medicaid growth won’t exactly be hailed as conquering heroes.

Together, these factors leave at most $300 million in savings associated with the non-long term care Medicaid program.

But the savings may not be even that high.

The reality is that Florida had a much slower growth rate in its Medicaid program from 2004 through 2009 than did the nation as a whole. The cumulative savings in Florida over this period was 10% compared to Medicaid spending in the nation as a whole.  Florida may have already squeezed the savings from Medicaid without resorting to managed care. 

Also, there is a new cost associated with turning the program over to the private managed care companies.  Unlike the state, these companies have to make money, which has to be added into the cost calculation.

Finally, reports authored by Jack Hoadley and Joan Alker of the Georgetown Health Policy Institute and released yesterday by the Jessie Ball DuPont Fund suggest that Florida’s own Medicaid managed care pilot program has disrupted care for Medicaid recipients while saving little or no money. 

In the face of all this evidence, saving even $300 million in Medicaid non-long term care is a long shot. 

So on what is Florida wagering $11 billion? 

Senator Joe Negron, the Senate legislation’s sponsor, says that Florida will drop out of the Medicaid program if the Federal Government refuses to go along with Florida’s managed care plan.

That’s an $11 billion gamble – the annual Federal reimbursement that Senator Negron says Florida will give up if the federal government doesn’t let it switch to managed care.      

Obtaining federal approval for unpopular Medicaid changes which could disproportionately and adversely affect elders is no sure thing.     

If Florida drops out of Medicaid, 3 million Medicaid recipients will become uninsured.  This will bring the total number of uninsured people in Florida to close to 7 million – more than 35% of the population.

Hospitals, nursing homes, independent physicians, community health centers, mental health centers, and other providers do not have the capacity to absorb care for 7 million uninsured people. 

Instead, Florida would have to create and fund a new plan to pay for the care of all 7 million people.  To do this, it would have 9 billion state Medicaid dollars with which to work. 

$9 billion – or $1,300 per person – may seem like a lot of money to provide care for these 7 million people.  But they aren’t young and healthy – remember, 70% of the Medicaid dollars go to long term care – and one nursing home bed alone can cost fifty times this amount.

$9 billion could disappear in a matter of weeks.

Florida can’t afford the gamble.  If saving $300 million in the Medicaid non long-term care program is the state’s goal, it should either find out in advance if the federal government is willing to approve or find another way to do it.   

After all, Florida’s not playing with house money, but ours.      

The War on Health

Policymakers across the country have declared war on health.  You may have missed the headline, but this is a war with many casualties.

Its objective is to topple health care as we know it.  When health care falls, our health will be the victim.

Battles are raging in many states to cut the legs out from under health care financing.

The Arizona Senate Appropriations Committee recently voted to eliminate the Medicaid program.  This would make 1.3 million people uninsured and cost the state $7.5 billion in federal funding. 

A Florida Senate leader has threatened to eliminate Medicaid unless the federal government agrees to massive changes.  This would cost Florida over $10 billion, and make 3 million people uninsured.

Wisconsin’s Governor has proposed dropping over 60,000 people from Medicaid because they are too rich.  “Too rich” means a two-person household income of less than $29,100.     

Medicaid isn’t the only target. 

Pennsylvania just cancelled its state-funded health insurance plan for low income residents.  As a result, 42,000 people lost their insurance.  A half million more on the waiting list have to fend for themselves.

New Jersey’s Governor proposed a 15% reduction in state health appropriations this year, six times greater than the overall reduction in his budget in his recent speech to the Legislature.

Florida’s Governor proposed eliminating state-run health department clinics, even when they generate revenue.  In Palm Beach County alone, this would cost 60,000 people their regular source of care.    

This war began quietly while the eyes of the public were focused on federal health reform.  The Center on Budget and Policy Priorities has detailed a number of battles we have already lost:

• New Jersey lowered income limits and reduced eligibility for the state’s Children’s Health Insurance Program.  50,000 more people are uninsured as a result.  
• Mississippi reduced its mental health budget by 22% in the last two years. 
• Illinois and Ohio cut community mental health services for children and reduced or eliminated community mental health services for adults who are not on Medicaid.

Elected officials declared this war on health by suggesting that health care was the weapon of mass destruction of our state economies.  It wasn’t.  The real weapons were the war in Iraq and Afghanistan at a total cost of over $1 trillion (and counting), for which the federal government did not have the courage to pay, and the greed of a financial industry which fattened our burst housing bubble. 

Health care is not a foe of the state, and people who need it should not be treated as enemy combatants.

However, people with mental illness are this war’s prisoners, often jailed instead of given the care they need.  This is not an exaggeration. The three largest mental health institutions in the country are Riker’s Island, the Cook County Jail, and the Los Angeles County Jail.  The largest mental health institution in Texas is the Harris County Jail.  It has 2,400 “patients” on any given day. 

In 2011, Texas is considering cutting $1.1 billion from state mental health services.  

According to the US Bureau of Justice Statistics, in 2005, more than half of over 2 million prison and jail inmates had mental health problems.    Over 1.25 million Americans are being “treated” for mental illness in our prisons and jails.

Elderly women and children are this war’s hostages. 

The Medicaid program funds 68% of the 1.8 million nursing home beds in the U.S.  Almost a million people live their lives in these beds.

650,000 of them are women, the vast majority over 75 years old and widowed.  In his recent speech, New Jersey Governor Christie articulated a fearful future for them.  Others share his vision “to move our aged, blind, and disabled [Medicaid] recipients into modern managed care.” 

These sick, elderly women suffer the indignity of being blamed for the state budget crisis they had nothing to do with creating.  If the Governor’s vision becomes reality, they won’t just have to cope with incredible health challenges.  They will be put at the mercy of the discredited “modern managed care” denial system.

Mostly under the radar, 31 states have already implemented cuts in children’s health programs.  As representatives of the Iowa Child and Family Policy Center and Voices for America’s Children note in their recent publication, The Healthy Child Story Book, for the first time in our history children may live shorter and less healthy lives than their parents.

Meanwhile, legislative bodies in Ohio, Louisiana, and Arizona have found the time to pass laws banning animal-human hybrids.  This is no joke.  The Louisiana bill’s sponsor, State Senator Danny Martiny, said the Louisiana Conference of Catholic Bishops asked him to introduce it.    

Louisiana ranks 49^th among the states in health, ahead of only Mississippi.  While imaginary beings occupy the attention of political and religious leaders, this war will produce millions of all-too-real casualties.