WHITE PAPER: MEDICAID EXPANSION
I. SUMMARY
The Florida Legislature has a historical opportunity to extend health care coverage to approximately one million low-income, working Floridians who currently have no prospect of obtaining affordable coverage. Not only will expanding Medicaid have a positive impact on the lives and health of our fellow citizens, it will bring over $24 billion of federal funding into our state economy.
II. BACKGROUND
In its recent landmark decision, the U.S. Supreme Court upheld the Patient Protection and Affordable Care Act (?PPACA?). The PPACA requires all states to expand their Medicaid programs to cover most people with incomes up to 138% of the federal poverty level (?FPL?),1 but the Court held that states that do not implement the expansion for adults will not lose federal funding for existing Medicaid programs. Therefore, each state has the choice of whether to go forward with this Medicaid Expansion.
To be eligible for Florida?s current Medicaid program, adults must be very poor and either have minor children or be disabled.2 Florida?s income limit for parents is less than 25% FPL. A single parent with two children can only earn an income of $303 per month or less after disregards ($3,600 annually) to be eligible for Florida Medicaid, and a single disabled adult can only make $698 a month or less ($8,400 annually). Nondisabled adults without minor children are currently ineligible, regardless of how poor they might be. If Florida expands its Medicaid program to cover adults up to 138% of the FPL, a parent with two children could earn up to $1,591 per month ($26,344 annually), and a single nondisabled adult could earn up to $1,285 per month ($15,414 annually) and still be eligible for Medicaid. While estimates vary, the Florida Legislature estimates that over 900,000 people will likely gain Medicaid coverage as a result of this extension.3
Medicaid is a joint federal-state cooperative program. Currently, the federal government covers approximately 58% of all Medicaid costs in Florida.4 This percentage is referred to as the federal matching rate or ?FMAP.? In contrast to 58% FMAP for the current Medicaid population, the PPACA requires the federal government to cover 100% of costs associated with the newly eligible Medicaid Expansion population from 2014 to 2016. The FMAP for the expansion population gradually tapers down to 90% in 2020 and remains at 90% FMAP thereafter.5 These federal matching rates are mandated by federal law and cannot be altered without an Act of Congress. Further, the federal Centers for Medicare and Medicaid Services have clarified that states can withdraw from covering the expansion population at any time.6
This paper discusses: the benefits of Medicaid Expansion to Florida residents, estimated state costs and savings, the projected economic impact, Medicaid Expansion and safety net funding for Florida hospitals, and the unanticipated adverse impact on Floridians without the extension of Medicaid eligibility.
III. BENEFITS TO FLORIDA RESIDENTS
Medicaid Expansion will help our families, neighbors, and communities to be healthier. It is well established that being uninsured contributes to unnecessary and early deaths, exorbitant and often unaffordable health care expenses, and preventable sickness and suffering. Medicaid Expansion gives Florida the opportunity to reduce our state?s number of uninsured by as much as 50% with virtually all of the costs paid for by the federal government.7 Extending Medicaid access to previously ineligible adults has been shown to reduce death rates and improve coverage, access to care, and self-reported health among this group.8 Working families with Medicaid coverage will be more likely to access the services necessary to stay healthy, and this will help promote a healthier workforce and increased production and tax revenue.
Children will also benefit considerably from extending Medicaid eligibility to adults at or below 138% FPL. Children who are eligible for health insurance are three times more likely to be enrolled if their parents also have insurance.9 In addition, studies have found that covering parents makes it less likely that children will experience interruptions in their own Medicaid coverage, and insured children whose parents are also insured are more likely to receive checkups and other care compared to insured children whose parents are uninsured.10 Access to health care during childhood is critical for life-saving prevention and early identification of problems.
IV. ESTIMATED STATE COSTS AND SAVINGS
A. Costs
If Florida extends Medicaid eligibility to 138% FPL, there will be costs to our state after the 100% federal contribution ends in 2016. However, the state?s cost in covering the newly eligible population is overshadowed by the tremendous amount of federal funds that will be spent in Florida to cover the newly eligible. Specifically, the Florida Legislature?s Social Services Estimating Conference projects that between SFY 2012-13 and SFY 2022-23, Medicaid Expansion will cost Florida $1.7 billion, while bringing in over $24.5 billion in federal funding into our state economy.11 Thus, the ?cost? to our state is more accurately characterized as a relatively small ?investment? that is guaranteed to yield very high returns.
An important factor in estimating the costs is the anticipated participation rate by those who will be newly eligible. The Florida Legislature?s Social Services Estimating Conference12 predicts that:
? Medicaid Expansion will likely provide Medicaid coverage to 80% of those eligible, including over 700,000 people in 2014-2015 and nearly 900,000 in 2020-21;
? Approximately $3 billion of federal funding will be spent in Florida each year to cover the newly eligible between SFY 2014-15 and SFY 2020-21; and
? Costs of Medicaid Expansion to Florida will be $0 in SFY 2014-15 and approximately $300 million in SFY 2020-21 (after the 90% FMAP has taken effect), as demonstrated in the graph below.
1. Impact on State Medicaid Budget
If Medicaid Expansion is adopted, Florida would be able to cover significantly more people with a comparatively small increase to our current state Medicaid budget. The state?s share of the Medicaid budget without expansion is projected to be $10.2 Billion in 2014-15 and $14.3 billion in 2020-21.13 Based on the state?s data, if the Medicaid Expansion is adopted, the state?s share of the Medicaid budget would increase by only approximately 2% in 2020, from $14.3 billion to $14.6 billion. And, again, the state?s contribution to coverage of the expansion populations does not begin until after 2016. As shown below, extending coverage to thousands of Floridians would require a comparatively small increase in our state Medicaid budget.
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