Florida Senate panel rejects Medicaid expansion—but it’s not dead yet

March 11, 2013
(Flickr)
(Flickr)

It was a huge coup for the Obama administration when they won Florida Gov. Rick Scott's endorsement of the Medicaid expansion. In his state alone, the Obamacare program could cover 1.3 million people.

But the governor wasn't the only endorsement they had to secure: The Republican-controlled Florida legislature would also need to sign off on the expansion. And as of Monday afternoon, they don't appear inclined to move forward: Committees in the Florida House and Senate have rejected the Medicaid expansion as proposed by Gov. Scott.

That last bit is important: As the Sun Sentinel's Kathleen Haughney reports, the Senate has also put forward an alternate plan for the Medicaid expansion. Legislators there proposed using Medicaid expansion dollars to buy private insurance for the same population.

The plan looks similar to what legislators in Arkansas are pursuing: Using an obscure provision of the Social Security Act to spend Medicaid funds on private insurance plans. Arkansas Gov. Mike Beebe brought the plan to the Obama administration last month and, to the surprise of many, got a preliminary sign off to move forward.

Whether the Florida plan moves forward as well remains to be seen. Health policy experts say that, in order for such a plan to work, insurers taking on Medicaid patients would need to hew to the program's strick restrictions on cost-sharing, not charging them anymore than they would pay in the public program.

If anything, the Florida Senate panel's decision—to eschew the traditional Medicaid expansion and propose a privatized version instead—speaks to what George Washington University's Sara Rosenbaum told me about privatizing the Medicaid expansion last week: "Every state is going to be eying this."

It's not hard to see why. There's still a huge level of opposition to the Medicaid expansion at the state level. Private insurance tends to offer easier access to doctors. States could, essentially, kill two birds with one stone: Eschew expanding an unpopular public program while likely bringing a more robust benefit to their citizens. This all, by the way, happens with the federal government footing the bill.

That could become an expensive and challenging endeavor for the Obama administration. For one thing, federal regulation requires that private insurance bought with Medicaid dollars must be of "comparable" value. As it stands, the Congressional Budget Office estimates that private plans cost $3,000 more than enrollment in the Medicaid program.

That difference might shrink a little bit, as states reap some efficiencies from moving more people into one large program. Does it get to a point where the two plans are "comparable"? That's up to the Obama administration to decide—and there are some who question the legality of approving expansions if the two numbers aren't especially close.

Arkansas is a relatively small state with about 240,000 people expected to enroll in the Medicaid expansion. If states like Florida and Texas start signing similar deals? Then the Obama administration potentially has a more expensive and legally shaky Medicaid expansion on its hands.

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Brad Plumer · March 11, 2013