Florida Gov. Scott exaggerates cost of Medicaid expansion, projections show

WASHINGTON - While refusing to implement " Obamacare ," Gov. Rick Scott has greatly exaggerated the state's projected cost for expanding Medicaid to explain why Florida cannot afford to cover nearly two million more low-income residents by the end of the decade.

Scott said the state refuses to sacrifice its job creation, economic growth, quality education and low cost of living by spending $1.9 billion to expand Medicaid under the new health-care law — citing a price that is nearly double state and federal projections.

"Florida will opt out of spending approximately $1.9 billion more taxpayer dollars required to implement a massive entitlement expansion of the Medicaid program," the governor's office said.

"We'll have to raise our taxes," the governor said on CNBC 's "Squawk Box" on Monday. "Right now you have a choice in Florida government. It's Medicaid, it's education or it's prisons. And Medicaid has been growing at three-and-a-half times our general revenue. So that has made it very difficult to fund our education."

But Uncle Sam would bear most of the expansion cost through 2016, and Florida's share would not reach $1 billion until 2016, according to the Florida Agency for Health Care Administration.

Florida is already on pace to enroll 3.3 million low-income, senior and catastrophically sick patients in the Medicaid program this year at a cost of $21.5 billion.

State economists project the state's cost under the expansion — which would take effect on Jan. 1, 2014 — would start out at about $121 million next year and grow to $1.47 billion annually by 2020. But $407.5 million of that 2020 total stems from higher payments to primary-care doctors that states aren't allowed to skimp on.

So, the most Florida could hope to avoid — if the law remains on the books and Florida refuses to participate in the expansion — is about $1 billion annually beginning in 2020.

The governor's office on Monday conceded that Florida's actual savings would be less than the $1.9 billion figure Scott has used and continued to use on "Squawk Box" and other television interviews. An email from spokesman Lane Wright said the state has "the ability to opt out" of $1.4 billion in payments.

Florida Democrats in Congress and promoters of the new law say the Medicaid expansion is a good deal for states.

"It would make a huge dent in the number of uninsured people, with the lion's share paid by the federal government," said Judith Solomon, vice president for health policy at the Center on Budget and Policy Priorities, a research group that favors health reform. Reducing the uninsured population will save the state money, she said, because people who now seek expensive emergency treatment at public clinics and hospitals would get preventive care through Medicaid.

Critics of the state say the actual cost will be much less.

The federal government will pay 95 percent of the expansion cost in 2017, 94 percent in 2018, 93 percent in 2019 and 90 percent thereafter. According to a study by the Kaiser Family Foundation, an independent health care research group, the cost to Florida from 2014 through 2019 would be $1.23 billion, or an average of $205 million a year, while the federal share would be $20.05 billion, or $3.34 billion a year.

But state economists say this underestimates the ripple costs that Medicaid expansion will have on other health and social programs.

Democrats in Florida want to take full advantage of the federal money, which they say will help those who don't now qualify for Medicaid but cannot afford insurance.

"Gov. Scott's decision will leave hundreds of thousands of uninsured Floridians with the emergency room as their only source for health care, which means every Floridian will continue to pay for these costs through higher insurance rates," said Jonathan Beeton, spokesman for U.S. Rep. Debbie Wasserman Schultz , D- Weston .

But Scott warned that the expansion would leave the state trapped with big obligations in the long run.

"It's going to be the biggest job-killer ever," he said last week.

The state can opt out of the Medicaid expansion because the U.S. Supreme Court , while upholding the law, said federal officials cannot withhold a state's regular Medicaid allotment to force it to expand its rolls. The expansion would include those with household incomes up to 138 percent of the poverty level, or $31,809 for a family of four.

The final decision on whether to expand Medicaid must be made in concert with state lawmakers who actually write the budget. And Republican leaders of both the House and Senate on Monday staked out a more measured position, saying they planned to spend the coming months studying their financial and legal options.

"Long-term, we're going to take a very deliberate and rational approach, and we'll do the right thing for Florida," said incoming House Speaker Will Weatherford, R-Wesley Chapel. "We've got plenty of time to think this through."

Incoming Senate President Don Gaetz , R-Niceville, said

both chambers agreed to spend the months leading up to the election studying how to implement the act, the costs and the legal contours, so Florida wouldn't be caught flat-footed after the election.

For one thing, Florida has already asked permission to move most of its Medicaid patients into managed-care contracts, and is awaiting word on how the national law will impact that.

"We're trying to hold all of this to the light," Gaetz said. "It's not a matter of being on the fence or not, it's a matter of knowing the facts."

Scott indicated he hopes the elections in November will undo the health care law, by electing Republican presidential candidate Mitt Romney and congressional Republicans intent on repealing the law.


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