Just weeks after a $1 billion hole in Florida's health care budget threatened to cause a government shutdown, another budget crisis could already be looming.
State economists predict Medicaid will cost the state an additional $500 million in 2016-17, in large part because enrollment in the subsidized health care program is expected to grow.
With the private health plans that cover Florida's Medicaid population already seeking more money from the state and hospitals requesting more for charity care, the need for an additional $500 million would be "impossible for the state to fulfill," Gov. Rick Scott said in a letter to state budget officials last week.
"We must immediately implement all options available to us to offset these new Medicaid costs, and work to produce more savings in every part of our health care system," he wrote.
The governor's nine-member panel on health care and hospital funding will discuss the increased costs — as well as legislation aimed at driving them down — during a meeting today in Tallahassee.
The increased enrollment was not unexpected. Even though Florida was among the states that refused federal Medicaid expansion dollars to cover higher-income residents, experts predicted more people already entitled to coverage would sign up as a result of publicity about the Affordable Care Act.
Florida privatized Medicaid in 2014 in hopes of saving at least 5 percent per member per month. The goal seemed within reach — until May, when the private health plans selected to provide coverage asked for a 12 percent rate increase to help offset the rising cost of prescription drugs, among other costs.
The request prompted a letter from State Agency for Health Care Administration Secretary Elizabeth Dudek alleging some plans were paying hospitals more than is legally allowed.
"It is my expectation that all businesses that enter into agreements in our state follow the law, and if they fail to do so, they must be held accountable," Scott said.
The latest Medicaid cost projections, which put overall spending for the program at $24.8 billion next year, gave Scott another reason to grumble.
In his letter to state budget officials, he suggested tackling the issue through new laws to "encourage competition and transparency in pricing."
Among the policies he supports: requiring health care pricing information to be published online, allowing insurance to be sold across state lines, and eliminating the "certificate of need" process that gives the state control over when and where new health care facilities can be built.
Rep. Jason Brodeur, a Sanford Republican who chairs the House Health and Human Services Committee, said he would be hesitant to approve more money for Medicaid until he saw information about how the dollars are being spent and the outcomes they are producing.
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"If we had lower rates of heart disease, type 2 diabetes or skin cancer, I would be willing to invest more money because that is a good spend," Brodeur said. "But right now, what is happening is we are being told we need more money to cover more people. Coverage does not equal good health outcomes."
He said new laws aimed at increasing price transparency and consumer choice would help bring down costs.
Sen. René García, a Hialeah Republican and chairman of the Health and Human Services Appropriation Subcommittee, said he would be willing to discuss those measures during the upcoming legislative session. But he was doubtful the policies would produce enough savings to plug the potential hole.
García said Florida would see more savings by accepting federal Medicaid expansion dollars to provide coverage to about 800,000 Floridians not eligible under the current guidelines.
Uncertainty over the health care budget already brought the Florida Legislature to a standstill once in 2015.
Earlier this year, the federal government threatened to end a $2.2 billion program called the Low Income Pool that reimburses hospitals for charity care, touching off a monthslong battle between the House and Senate over how to plug the hole.
The Senate said Medicaid expansion would help, arguing the move would provide coverage for people who would otherwise receive charity care. But the House refused, saying it was too risky for Florida to rely on Washington for health funding.
Federal Medicaid officials ultimately decided to phase out the Low Income Pool program over the next three years, meaning the Legislature had to make up only $1 billion in the current fiscal year. The House and Senate agreed in late June to use a combination of state and federal money to fill the gap.
Contact Kathleen McGrory at firstname.lastname@example.org or (727) 893-8330. Follow @kmcgrory.