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Thursday, January 10, 2013

Broccoli Ice Cream

It has been two days since Florida Governor Rick Scott traveled to D.C. to meet with HHS Secretary Kathleen Sebelius to discuss  possible Medicaid expansion under the Affordable Care Act  in Florida. Since then, Mum's the word on what they discussed. 

But today we are being inundated with competing  ten-year cost estimates for Florida's possible Medicaid expansion.  Governor Scott estimates a state taxpayer burden of $26 billion but the Florida Agency for Health Care Administration estimates a $3 billion price tag.

Why the spread?

Some of the difference relates to Governor Scott's  budgetary assumption that the federal government will change the law and reduce funds pledged to the state. Florida's Agency for Health Care Administration priced the possible expansion as written -- the federal government to assume 100% of the expense for expanded Medicaid enrollees in 2014-2016, gradually tapering down to a 90% federal government cost share in 2020 and beyond.  This is in contrast to Florida's conventional Medicaid match or Federal Medicaid Assistance Percentage (FMAP), set at  58.08% in 2013.

Governor Scott's  budget assumption discloses his disbelief that the federal government can or will honor the enhanced cost share.  Whether the budgetary assumption is designed to disguise the generosity of the federal enhanced matching percentage  is unclear.  Certainly, it is harder to rationalize turning down something free -- what I have analogized to the offer of a free ice cream cone -- all upside and no visible downside.

Another contributor to the wildly different budgetary estimates is more subtle, however.  Governor Scott's budgetary estimate appears to add in a high-end estimate of funds to cover Medicaid enrollment for those Floridians currently eligible for Medicaid but presently unenrolled. The governor's budgetary estimate, in short, acknowledges two truths: Medicaid's current eligibles have surprisingly low participation or take-up rates and any increase in take-up rates among this population will be at Florida's standard Medicaid matching percentage of  58.08 %, not at the ACA-enhanced matching rate.  It is easier to understand fearing increased Medicaid enrollment that comes without full or near-full federal subsidy -- something I analogize to broccoli.

Why would Governor Scott think Florida's non-expansion Medicaid population will increase?  Because Florida's Medicaid take-up rate has lots of room for increase.  Best estimates are that there are 500,000 children in Florida currently eligible for Medicaid (and Medicaid extension programs) who are not enrolled. No one knows how much of the outreach effort to enroll the Medicaid expansion population could spill over into increased currently eligible Medicaid take-up. No one knows how much of the ACA-mandated streamlined Medicaid eligibility guidelines and processes will spill over into increased currently eligible Medicaid take-up. Everyone is busy guestimating, though.

This is the story of Medicaid expansion from a state budgetary perspective: ice cream (100% federal match) plus broccoli (significantly increased already eligible take-up at a non-enhanced subsidy).  

That's why I call it broccoli ice cream.

Posted by Ann Marie Marciarille on January 10, 2013 at 12:36 PM | Permalink

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