The decision last week by a Florida House panel to reject Medicaid eligibility expansion is basically a win/win, for the politicians involved at least. House members can go back to their conservative constituencies and say they stood up to the bogeyman of national socialized medicine, while Gov. Rick Scott comes out looking even more like a moderate for his 2014 reelection campaign, willing to go against his party for popular measures.

Scott's decision to accept Medicaid in the first place exposes him to a primary challenge from the right (Attorney General Pam Bondi has already called the move a "surrender"), but he will continue to receive campaign funds from hospitals and insurance companies. Perhaps a portion of the approximately 1 million Floridians newly insured under the Medicaid expansion will cast their ballots for Scott next year.

The Florida Senate leadership has been far more receptive than the House to Medicaid expansion, and if they go along with eligibility expansion, they can work on a compromise deal with the House. At this point, the House can demand "concessions," the same way Gov. Scott extracted "concessions" from U.S. Secretary of Health and Human Services Kathleen Sebelius.

Scott could tell Floridians that he extracted two major concessions that protected the state's liberties and entrenched a commitment to free-market healthcare. First, the governor framed his decision as an acceptance of "limited" expansion, with the option to pull out after three years, or if the federal government reneges on its commitment to funding levels. Of course, all states enjoy the option of dropping out of expansion after opting in, as per rules issued by the Department of Health and Human Services last year, but Scott has presented this as a privilege he pried from the Obama administration.

Secondly, Scott framed permission from the Centers for Medicare & Medicaid Services to mandate managed Medicaid as part of a quid pro quo: the state would not budge on eligibility expansion until the feds gave a waiver for managed care expansion. But in reality, in order for the state's managed Medicaid expansion to attract the highest number of bidding MCOs, the program needed to arrive with eligibility expansion.

Florida Medicaid is much more attractive to potential insurers with the eligibility expansion. If Florida Medicaid stays at current eligibility, the only adults who will qualify are the pregnant, the disabled and the very poor. Childless nondisabled adults do not qualify, and parents with minors only qualify if they make less than 25 percent of federal poverty level (Florida CHAIN). About 2 million people would enroll in managed Medicaid under current levels, while another 1 million or so will enter if eligibility is expanded.

Of course, there are several national insurers that cater largely to this existing Medicaid population, such as Amerigroup (now part of WellPoint), WellCare, Centene and Molina, and all four participate in the state's managed Medicaid program, along with UnitedHealth and Humana. But in nearly all of the state's counties, managed Medicaid is not mandatory, and in these counties, more Medicaid beneficiaries are enrolled in fee-for-service, primary-care case management and provider service networks (total of 1.8 million combined) ) than in a Medicaid HMO (1.1 million). This could be the result of beneficiaries simply avoiding HMOs, or insurers cherry picking those with less risk.

A clearer picture comes from the five counties in the state where managed Medicaid is mandatory. Within the five counties, Medicaid focused Centene and Molina are the HMO leaders, along with newly bankrupt Universal. Some of the largest enrollment goes to provider service networks based on the safety net hospitals of Jacksonville and south Florida. This dynamic is partially due to beneficiaries being burnt when WellCare, Amerigroup and UnitedHealth all pulled out of the pilot project in 2008 because the state passed a 5 percent reduction in reimbursement.

Without eligibility expansion, the state's managed Medicaid program could be left to small community nonprofit insurers, national Medicaid-focused MCOs, and the local safety-net hospitals. The larger national plans may simply decide that the program is not worth the risk, especially now that it comes with a five-year contract with stricter punishments for leaving early. Without the larger insurers, the bidding process may be less vigorous, and the state may not see the savings it had hoped.

That is a long way of saying that Scott's concessions were not actual concessions, but political moves. The Florida House will be looking for similar sleight of hand. It is currently floating the idea of using Arkansas? Medicaid model, where beneficiaries are given federal funds to buy insurance on the exchange. The proposal is perplexing because Scott has already worked out a deal in which beneficiaries will be required to enroll in managed care, but by going through Medicaid instead of the exchange, the program will be far cheaper. The House will continue to posture against Obamacare until the Senate passes its version of eligibility expansion. At the end of the session, don?t expect the program to look fundamentally different than the one Scott announced in February.

Follow Mark Cherry on Twitter @MarkCherryHLI


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