The Me-Too Medicaid Saga Begins

by Karan Chhabra and Adrianna McIntyre

Attention on Arkansas’s plans for Medicaid has barely died down, but the wonkosphere is exploding yet again. Apparently following Governor Beebe’s lead, Florida legislators just proposed an alternative to Gov. Rick Scott’s plan to expand Medicaid.

The state’s evolution on Medicaid expansion was catnip for policy wonks—Gov. Rick Scott led the 26-state lawsuit against Obamacare, but reversed his position last week when he said he’d accept federal funding to expand Medicaid through a managed care program. On Monday, though, his proposal was voted down by a state Senate committee vote along party lines (with GOP congressmen bucking the Republican governor’s plan):

Rebuffing Gov. Rick Scott’s support of Medicaid expansion, a Florida Senate committee on Monday rejected the idea, all but ending the possibility that the state would add more poor people to Medicaid rolls.

But the select Senate panel debating the expansion proposed a compromise: to accept the federal money but use it to put low-income people into private insurance plans. Accepting the money would please the governor and a number of Floridians, while steering people away from Medicaid, which many lawmakers and residents view as troubled.

Wait a second–the Senate’s plan sounds a lot like Arkansas’s! We’re marshaling every ounce of self-control we have to resist saying “we told you so,” but—we had a feeling. The article continues:

A Senate committee will convene to craft a plan that would use federal dollars under the law to expand Florida Healthy Kids, a well-established, well-liked health care exchange for low-income children. The proposal would allow the one million uninsured adults who qualify under the health care law to join the exchange and choose among various insurance plans. They would pay on a sliding scale, depending on income.

The “sliding scale” in this proposal is the biggest difference from the Arkansas plan, under which the federal government pays for all of an individual’s premiums. (We’re working with very little detail here, but bear with us.) We’ve argued that Arkansas’s plan is fishy because it’s likely to cost the government more than traditional Medicaid expansion–a “sliding scale” might overcome that problem. But it may also be legally dubious, because according to Medicaid expert Sara Rosenbaum, state premium assistance plans can’t increase the level of cost-sharing expected of individuals relative to Medicaid expansion. This might change if Florida chooses to pursue its plan through a waiver [1], though we’re skeptical that HHS would allow such an exception.

Assuming, then, that this new plan doesn’t pass on additional costs to beneficiaries, how much could this run the feds? Using the same gorilla-math we used for Arkansas and Texas, a maximum of $3.9 billion [2].

Bottom line: the Arkansas deal, as many observers have predicted, set a precedent that seems to have other states jumping for a piece. Wild as it sounds, as Austin Frakt notes, as potential costs grow, they might even cause HHS to backtrack on the private option altogether. We’re still hanging tight for some words from HHS clarifying its position on these proposals and others, but till then, expect many more state lawmakers to turn into Beebe-liebers.

Footnotes (These seem to be habit-forming.)

1.  As an aside, Medicaid waivers typically require plans to be budget-neutral, which this is unlikely to be, for reasons we’ve already discussed.

2.  Why $3.9 billion? 1,295,000 projected new eligibles, each costing $3,000 more than they would’ve in Medicaid comes out to $3,885,000,000. This is on the high end, assuming that subsidized commercial plans aren’t any cheaper than what’s already on the exchanges.

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Karan is a first-year student at Robert Wood Johnson Medical School and Duke graduate who previously worked in strategic research for hospital executives.Follow him on Twitter @KRChhabra.

Adrianna works in clinical research and is a graduate student in public policy & public health at the University of Michigan. Follow her on Twitter @onceuponA.

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4 thoughts on “The Me-Too Medicaid Saga Begins

  1. [...] are covering the latest ins and outs of the Medicaid expansion deals with much more timeliness than I. The [...]

  2. According to KFF, for FY 2009, both Florida and Arkansas were below the national average for Medicaid spending per enrollee. So it’s possible that the costs could be even higher than your estimates.

  3. FL Sen. Joe Negron just released language for a Florida Medicaid expansion (http://bit.ly/ZQqBwj). It introduces vouchers like Arkansas would, but to me the FL proposal doesn’t look like it would operate through an exchange. It just builds on Florida Healthy Kids Corp. This would seemingly make it less appealing to the Obama administration to grant a waiver. In AR, you get the expansion and the exchange.

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