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Resisting the Wave of Medicaid Expansion: Why Florida Is Right [1]

['Brian Blase', 'Drew Gonshorowski', 'Var Authorslistajaxsearch', 'Ajaxurl', 'Https', 'Paragoninstitute.Org', 'Wp-Admin', 'Admin-Ajax.Php', 'Nonce', 'Var Molongui_Authorship_Byline_Params']

Date: 2023-12-18 00:00:51+00:00

Federal dollars have enticed 40 states plus the District of Columbia to expand the Medicaid welfare program to able-bodied, working-age adults under the provisions of the Affordable Care Act (ACA). While expansion does deliver additional federal funding to states and lead uninsured and previously privately insured residents to enroll in the program, there are significant drawbacks to expansion.

The actuarial consulting firm Milliman estimates that expansion in Florida would lead to 2.13 million additional Medicaid enrollees by 2029 with a projected cost of $123 billion over the 2025-2034 period. Under a high estimate, which accounts for higher enrollment and uses cost growth projections from the Congressional Budget Office, expansion enrollment would be 2.63 million with a projected cost of $176 billion. Although federal taxpayers would bear most of these costs, the respective costs to Florida would be between $11.1 billion and $17.2 billion under these scenarios.

Milliman estimates that Medicaid enrollment would increase between 47.4 percent and 59.8 percent, and Medicaid spending would increase by between 30.4 percent and 42.8 percent if Florida expands Medicaid. States that have expanded their Medicaid programs typically have much higher enrollment and spending than projected. If Florida adopts the ACA’s Medicaid expansion, approximately 30 percent of Floridians would be enrolled in the program, and there would only be 1.5 workers for every Medicaid recipient.

Overall enrollment exceeded projections by more than 50 percent on average in states that expanded Medicaid under the ACA, and spending exceeded projections by a third. Importantly, if the trends from other states continue in Florida, the state could expect total expansion enrollment of more than 3 million people with state costs between $15 billion and $26 billion over the 2025-2034 period.

Florida’s favorable tax and spending climate, with no state income tax and per capita spending far below the national average, has contributed to both population and economic growth in the state. If Florida expands Medicaid, the state would need to raise much more revenue, and Medicaid would further crowd out other state priorities such as education, infrastructure, and transportation. If Florida expands Medicaid, Medicaid spending as a share of the state budget, inclusive of federal dollars, would increase from 31 percent to about 40 percent or more using Milliman’s estimates.

As states expanded Medicaid, the national Medicaid improper payment rate nearly quadrupled. If these trends hold for Florida, improper payments in Florida’s Medicaid program would rise by billions of dollars each year. Pharmaceutical fraud and abuse has been one particular area of concern with the growth of Medicaid.

Medicaid expansion would have harmful health care effects in addition to the deleterious fiscal effects. Expansion would lead to greater health care access challenges for existing enrollees. Recent research demonstrates that expansion has resulted in states shifting resources from traditional Medicaid enrollees, such as children and people with disabilities, and toward able-bodied, working-aged adults while creating a disincentive to work.

Under expansion, Medicaid recipients have more difficulty obtaining primary care appointments, experience longer wait times for specialty care, and wait longer for ambulances. According to Milliman’s projections, 65 percent of the people who would gain Medicaid in Florida would replace private coverage, which offers better access to both primary and specialty care appointments. Because Medicaid enrollees struggle obtaining appointments, Medicaid expansion results in a significant increase in emergency department utilization. Based on the experience of other states, if Florida expands Medicaid, it would be more challenging for existing Medicaid recipients to obtain appointments.

The health effects of Medicaid expansion have been disappointing, and expansion may in fact lead to worse overall population health. Several studies—including the Oregon Medicaid experiment, which randomly assigned people into Medicaid—find that Medicaid enrollment does not improve physical health outcomes. Expansion could lead to worse overall health outcomes if it reallocates services away from people who need them more to people who benefit less from the additional services. In fact, from 2013 through 2017 (the first four years of the ACA’s Medicaid expansion), the mortality rate worsened in expansion states relative to non-expansion states, as Medicaid expansion states had worse opioid-related mortality.

Although hospitals lobby for Medicaid expansion, it is not clear that they benefit from it. Part of this is because people replace private coverage that pays higher rates with public coverage that pays lower rates. Regardless, Florida’s hospitals are extremely profitable now, with profit margins well above the national average, and they certainly do not need additional revenue from taxpayers or to become further dependent on government programs for their revenue. The expansion’s main economic effect seems to be producing a windfall for health insurers at taxpayers’ expense.

Florida’s costs could increase much more depending on future policy changes. If Florida adopts Medicaid expansion and the enhanced federal medical assistance percentage (FMAP) is lowered to the normal FMAP, the state would be on the hook for an additional $40.5 billion from 2025 to 2033. And this outcome is a real possibility. Lawmakers in Florida, particularly those who consider themselves fiscal conservatives, should be skeptical of expansion because of the precarious federal fiscal position. Within the next decade, Congress will be forced to deal with the significant fiscal pressures that government entitlement programs are placing on the federal budget. When this happens, lowering the FMAP for the expansion population—which President Obama proposed in his 2012 budget and which passed the House of Representatives in 2017—will be under consideration.

The conclusion is clear: Florida has made the right decision to not expand Medicaid under the ACA thus far. Expanding would necessitate higher state taxes, force cuts to other state priorities, and reduce access to care for traditional Medicaid enrollees and many new Medicaid enrollees, most of whom would replace private coverage with Medicaid. Expansion would lead to a surge of improper payments and unnecessary emergency department use. There is no evidence that Floridians overall would receive health benefits from expansion, and the financial impact on hospitals is unclear. Adopting Medicaid expansion would make Florida increasingly dependent on the federal government and vulnerable when the federal government eventually lowers the enhanced rate for the expansion population.

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[1] Url: https://paragoninstitute.org/medicaid/resisting-the-wave-of-medicaid-expansion-why-florida-is-right/

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