Florida legislators’ refusal to expand the eligibility criteria for Medicaid as called for under the Affordable Care Act might cost billions of dollars in lost funding for hospitals that treat many uninsured patients, according to a report released Monday by Florida Legal Services, a nonprofit legal advocate for the poor.
The financial impact would be felt most acutely by so-called “safety net” hospitals statewide, and in Miami-Dade, particularly by the taxpayer-owned Jackson Health System, according to Florida Legal, which estimated that Jackson could lose more than $570 million a year.
Other Miami-Dade hospitals, including University of Miami Hospital and Mount Sinai Medical Center, could lose as much as a combined $60 million a year, according to the report, while hospitals in Broward, Palm Beach and Monroe counties stand to lose more than $500 million in annual federal funding.
But if state legislators were to accept the government’s offer to spend about $5 billion a year to expand Medicaid to an estimated 760,000 more Floridians, the new revenue would more than offset the anticipated loss of federal funding for hospitals that treat many uninsured patients, Florida Legal reports.
Given that Miami-Dade is home to the state’s largest numbers of uninsured residents, the local public healthcare safety net risks serious damage without Medicaid expansion, said Charlotte Cassel, an attorney with Florida Legal and a co-author of the report.
“Miami-Dade cannot afford [for Florida] not to expand Medicaid,” she said. “It will be a crisis.”
Florida Legal’s report found that Miami-Dade is home to more than 160,000 residents who fall into the so-called “coverage gap,” which means they are not eligible for Medicaid and they do not earn enough income to qualify for government financial aid to buy private health insurance on the ACA exchange.
Miriam Harmatz, a senior attorney with Florida Legal and a co-author of the report, said Florida has an estimated 760,000 residents in the coverage gap who will not have access to health insurance even with ACA reforms.
“The Legislature has a chance to address that,” she said.
The anticipated funding cuts reported by Florida Legal derive from a series of agreements between Florida and the federal government, and the intent of President Barack Obama’s healthcare reform law, which had anticipated that more Americans would have access to insurance under the ACA, reducing the amount of uncompensated care delivered by hospitals.
The healthcare law calls for gradual reductions in certain payments known as Disproportionate Share Hospital (DSH) program funds. In 2014, Florida hospitals will receive almost $240 million in DSH funding, which the state then distributes according to a formula.
But the biggest loss stems from a July 2014 agreement between Florida and the Centers for Medicare and Medicaid Services, which administers the healthcare programs on the federal level.
That agreement calls for the elimination of about $1.8 billion a year in statewide funding through the Low Income Pool program (LIP) starting on June 30, 2015.
The federal funding cuts are scheduled to occur regardless of the Florida Legislature’s actions on Medicaid, according to Florida Legal’s report. For Medicaid expansion to occur in Florida, the legislature would have to approve a Medicaid expansion bill and Gov. Rick Scott, a Republican, would have to sign it.
Florida Democrats and some Senate Republicans have said the state ought to accept the federal money to expand the program, including Sen. Rene Garcia, a Miami-Dade Republican.
At a meeting of Miami-Dade commissioners Nov. 5, Garcia stumped for Medicaid expansion, repeatedly calling it “a game changer” for the state.
“There’s about $50 [billion] to $66 billion waiting to coming into this state,” he said, referring to a 10-year estimate of the federal government’s pledge to never pay less than 90 percent of the cost of adding more Floridians to Medicaid.
Then he laid down the gauntlet: “If the feds continue down this path” of eliminating DSH and LIP funding, Garcia told the commission, “Jackson will be out about $500 million. So you all are going to have to come up with that money.”
As Miami-Dade’s public hospital system, Jackson relies on a balance of local, state and federal funding to operate the $1.6-billion-a-year system of hospitals, community clinics and physician offices.
This year, Jackson administrators estimate that Miami-Dade will contribute about $370 million in local property and sales tax support.
According to Florida Legal, Jackson will receive about $570 million in LIP funds this year and about $75 million in DSH funds.
Carlos Migoya, chief executive officer for Jackson Health, said the nonprofit hospital system is looking at “statewide level” solutions to make up the funding if the federal government ends the programs.
Migoya said Medicaid expansion is “one of our very top priorities,” but that Jackson would also explore “other funding opportunities’’ to pay for care of the uninsured and indigent if the DSH and LIP programs end.
Still, Medicaid expansion will not help Jackson with a chunk of its uncompensated care — the amount spent to care for undocumented immigrants.
Jackson’s total costs for providing medical services to the undocumented in the year ending Sept. 30, 2014 was about $47.6 million. Jackson’s total costs for uncompensated care in the same time period was $485 million.
State Medicaid administrators, hospital representatives and others have been meeting with CMS officials in an effort to persuade the federal government to extend the LIP program beyond June.
Mark Knight, chief financial officer for Jackson, said that is among the hospital system’s preferred paths.
“Right now, we are supporting a revised LIP program,” Knight said, noting that California and Texas officials have negotiated continued federal support for the care of uninsured patients.