Accelify Blog

Putting off Medicaid Reform Compounds Pain in the Future (FL)

May 3, 2010

Florida legislators thought they had it rough balancing the state budget this year, yet they balked at proposals to rein in runaway costs in the state’s Medicaid  program. As a result, they — or their successors — may someday look back on this year’s legislative session as a cakewalk.

Medicaid, a federally and state-funded program, covers health care for the poor and disabl ed. It already consumes more than a quarter of the state’s budget by insuring at least 2.7 million Floridians. By 2014 it’s expected to chew up a third of the budget.

That year, the new federal health reform law will add at least 1 million more Floridians to the program by raising its income threshold. Federal funds will pay the full cost of covering those new patients, but only for three years.

And a mandate under the new law for everyone to have health insurance — if it withstands court challenges — will push even more lower-income people into the program. Their costs will not be fully underwritten by Washington.

Medicaid’s skyrocketing budget in Florida will leave fewer dollars in every other state spending category, from education to public safety to environmental protection. That could mean tax hikes.

Members of the House and Senate drafted separate proposals for this legislative session to bring Medicaid spending under control. The proposals would have put more or all of the program’s patients into less-expensive care managed by health maintenance organizations or networks of doctors and hospitals.

The more sweeping House proposal, which we preferred, would have put virtually all Medicaid patients under managed care, but over a five-year period. And it would have forced managed-care organizations to spend 85 percent of their fees on patient care.

Even the House proposal was incremental, not radical. More than 40 percent of Medicaid patients already are covered under managed care.

Instead of working out the differences and passing a plan, leaders buckled under pressure. Much of it came from health-care groups that prefer the current and more expensive system of paying pr oviders based on patient visits and procedures, rather than paying by the patient under managed care.

Leaders made excuses by arguing that neither proposal would have saved big money next year anyway — from $16 million at most under the House blueprint to $29 million under the Senate’s. That may seem small in a $70 billion budget, but it could have reduced or eliminated budget cuts in other programs.

The likely savings would have grown substantially in future years, into hundreds of millions of dollars. Leaders have now put off the chance to reap those benefits by at least another year. Typical Tallahassee short-term thinking.

Leaders also have wasted a year that could have been used to smooth the transition to changes in Medicaid. That time could have been used, for example, to ensure that patients in rural areas have proper access to specialists under managed care.

Florida’s current Medicaid program is a bureaucratic tangle of providers and payment systems. Regulators are in a poor position to control spending, monitor the quality of care or ferret out fraud.

Acknowledging these problems, the House began working on its proposal months ago. It erred, however, in not unveiling a bill until late in the legislative session. That let opponents mislabel the proposal as rushed, and gave leaders another excuse for inaction.

Entering next year’s session, both chambers need to be poised to tackle Medicaid reform instead of getting distracted by shiny objects. Florida can’t afford to keep waiting.