Florida gets Medicaid funding boost from the federal government

When the coronavirus pandemic hit Florida last March, health care spending already made up about a third of the state budget.

Now, with thousands out of work and thousands more dealing with the prolonged health consequences of COVID-19, Florida has seen its expensive Medicaid program get even pricier.

But thanks to an additional boost by the federal government, those in charge of the health care budget say they can breathe a small sigh of relief.

Congress passed the Families First Coronavirus Response Act last March, which included a temporary increase in the state’s Federal Medicaid Assistance Percentage, or FMAP, from Jan. 1, 2020, through the duration of the emergency period. This allowed Florida to pull down hundreds of millions in additional federal Medicaid dollars in exchange for keeping premiums the same and not scrubbing the list for Floridians enrolled who may no longer qualify for the program.

According to a letter sent to governors two days after President Joe Biden’s inauguration, the federal government’s public health emergency for the coronavirus pandemic will likely remain in place for the entirety of 2021. It will expire at the end of the quarter in which the public health emergency ends.

The provision was a 6.2 percentage point increase in the federal government’s share of a state’s Medicaid costs.

This means that for every dollar the state spends on most Medicaid programs, the state will have about $2 to spend in federal funding. Before the pandemic, that figure was $2.63. Through March 2021, the state is expected to save about $463.9 million in general revenue from the enhanced funding, according to Tonya Kidd, the staff director for the state Senate’s health and human services appropriations subcommittee.

“With the extension and additional advance notice, we seek to provide you with increased budgetary stability and predictability during this challenging time,” acting Health and Human Services Secretary Norris Cochran wrote to governors in the January 22 letter.

Generally, the formula is designed so that the federal government pays a larger portion of Medicaid costs in states with lower incomes relative to the national average (and vice versa for states with higher incomes). Florida’s rate for Fiscal Year 2021 (before the increase) was 61.96 percent, according to a report prepared for members of Congress earlier this summer.

In Florida, children, parents and caretakers of children, pregnant women, people who were once in foster care, noncitizens with medical emergencies and elderly people or people with disabilities who don’t receive Supplemental Security Income are eligible for Medicaid. One of every three dollars the state spends goes toward Medicaid payments.

The cost of Medicaid in Florida, which is funded jointly by the state and federal government, has risen by nearly $3 billion during the pandemic, Gov. Ron DeSantis said last week when he announced his legislative budget proposal for the year.

For a program that spent $30 billion in Florida last fiscal year to give health insurance to the state’s poor and sick, extra money from the feds adds up quickly.

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Even with the boost from the federal government, the extra money wouldn’t cover all of the costs that come with increased enrollment this year.

Florida would be on the hook for about $1.3 billion, according to Fernandina Beach Republican Sen. Aaron Bean, who is in charge of developing the healthcare budget in the Senate. In the past when there have been shortfalls in Medicaid, the Legislature has made budget reductions to try to make ends meet. Bean said the increase in funding will blunt the blow significantly.

“It helps tremendously, but we are facing unprecedented items with costs that are going up,” he said. “We are going to make reductions, but had we not had this, the reductions we were going to make would be much more aggressive. This is going to allow us to go forward in a much less sharp way.”

The strings attached

The boost in funding comes with a catch: In order for states to be eligible, they must not restrict Medicaid eligibility, nor are they allowed to raise premiums. They must also put a freeze on terminating coverage for those already enrolled in the program.

Bean noted that the state normally saves millions by scrubbing its Medicaid rolls of ineligible residents — a practice the federal government has temporarily forbidden. But it’s a minor concession given what Florida still stands to gain from the federal funding, Bean said.

“We are happy to oblige by the rules in order to take advantage of the additional monies,” he said.

Sen. Gayle Harrell, former Senate Health Policy chairwoman, said she plans to keep an eye on the long-term impact of not ending coverage for ineligible Floridians but agreed the federal dollars are worth it. She noted that more than 800,000 new people have enrolled in the state’s Medicaid program since the pandemic began, so every dollar of help counts.

“We are going to be looking at every single penny and will be spending a significant amount more in Medicaid,” the Stuart Republican said, noting that Medicaid is always the biggest item on the healthcare budget each year. “We are going to be as fiscally responsible as possible in deciding how we spend our money. We do things that have to come first. Medicaid is something that has to come first.”

Beyond the fiscal benefit of the federal dollars, Democratic Rep. Nicholas Duran, of Miami, said agreeing to not cut off Medicaid to those no longer eligible helps Floridians achieve stability, even if they get re-employed.

“It really helps people get back on their feet,” said Duran, who is a member of the committee tasked with drafting the health care budget in the House. “It is a way of helping families get back to it, get back on with it.”