With the Supreme Court leaving the decision to expand Medicaid eligibility up to individual states, Florida has been seen as a state that will likely reject the invitation, and there's a lot of evidence to support that opinion. The case, after all, was "Florida v. Department of Health and Human Services." Gov. Rick Scott has publicly stated that he won't pursue Medicaid eligibility expansion, claiming that it is something the state cannot afford, even though the expansion is covered 100 percent by the federal government for the first few years and 90 percent after that.
Up to this point, Florida Republicans have been completely content to reject nearly all federal funding associated with the Affordable Care Act, and if the only people to advocate Medicaid eligibility expansion in the state are a dwindling number of Democratic lawmakers and bleeding heart liberal groups, the state GOP would relish the opportunity to turn away billions of Obama-tainted dollars. But these same Republicans are very sensitive to the needs of a valued constituent: big business.
Consider for-profit hospital chains HCA and Tenet, the former being Gov. Scott's old company. Both companies have the bulk of their facilities in Florida and Texas, and are now facing the possibility that these two states will continue to have high uninsured rates. Half of HCA's beds are in Florida and Texas, and just under half of Tenet's are in those two states. Both hospital companies saw Obamacare as a conduit for increasing the number of insured patients, particularly in Florida and Texas, where the existing thresholds for Medicaid restrict coverage to only the neediest of residents.
If these states choose to keep residents earning below the federal poverty level uninsured, HCA and Tenet will continue to see a substantial amount of bad debt. This debt is currently covered by federal Disproportionate Share Payments (and the Low Income Pool in Florida), but the ACA phases these payments out over time. Hospitals in Florida and Texas have been willing to serve the extremely high uninsured populations in their respective states because they were still getting paid through sizable DSH payments, and the expansion of health insurance coverage was seen as an offset to the proposed reduction in DSH payments.
In fact, this was the rationale Mitt Romney used in crafting Massachusetts' individual mandate -- those state funds were initially going to compensate uninsured patients at hospitals, so why not redirect those funds to simply make everyone insured. Without Medicaid eligibility expansion, hospitals in Florida could find themselves in severe distress, still serving high levels of uninsured but receiving diminishing compensation.
In addition to for-profit hospitals, consider the health plans looking at entering Florida's planned statewide managed Medicaid expansion. While Gov. Scott seethes at the notion of the federal government compelling citizens to enroll in managed care, he has no compunction about forcing the poorest residents in his state into health plans. The state has been awaiting CMS approval to expand an existing pilot statewide, moving virtually all Medicaid beneficiaries in Florida into either a Medicaid HMO or provider-service network.
Health plans are lining up to participate in Florida's managed Medicaid expansion. UnitedHealth already has a large presence in the market, including established dual-eligible plans. Florida Blue, the state's Blue Cross Blue Shield plan, announced plans to enter the Medicaid market earlier this year. Aetna is going in, as is WellCare.
Before the Supreme Court's ruling on healthcare reform, the state Agency for Health Care Administration claimed that a total of 2 million residents would be enrolled in Medicaid managed care as the law was then written. If the Medicaid expansion under Obamacare stood, that figure would be closer to 3 million. The state's choice to restrict Medicaid eligibility not only takes 1 million customers off the table, but keeps those federal funds out of the pockets of managed care.
If Florida rejects Medicaid expansion, these health plans are looking at bids to cover only the most destitute Floridians. It is conceivable to think that a few of these insurers might reconsider entering the state's managed Medicaid scheme if it is restricted.
Some local observers have suggested that CMS was waiting for the Supreme Court decision before issuing a waiver for Florida's managed Medicaid expansion. If the waiver is granted, Florida officials may be under greater pressure from MCOs to go along with eligibility expansion. Then again, the waiver could be used by the feds as an enticement for expansion.
Along with the financial pressures coming from health plans and hospitals (not to mention physician groups and a growing pharma distribution industry), the political winds have now shifted from the state's GOP taking a stand against federal overreach to Florida lawmakers making a conscious effort to withhold healthcare from residents. That's the problem with arguing for "states' rights" -- at some point that turns to "states' responsibility."
With an approval rating in the 30s, Gov. Scott may not have political capital to sway state legislators, who will have a harder time convincing constituents that Medicaid eligibility and health insurance exchanges are evil government impositions. If Obama wins re-election, expect Florida lawmakers to start laying the groundwork for greater Medicaid membership in time for the 2013 legislative session.