Scott Assumes Federal Government Won’t Keep Word and Uses Projections Even State Staffers Question

Published Jan 9, 2013. By Laura Green. In The Palm Beach Post.

 

Gov. Rick Scott has made no secret of his mistrust of the federal government. But now his administration appears to be factoring that skepticism into the math he and lawmakers use to decide whether to insure at least 1 million more low-income Floridians.

Scott’s team decided to publish numbers that assume the federal government will default on its promise to largely pay for an expansion of the Medicaid program, according to internal email obtained by nonprofit Health News Florida.

Although the Obama administration has pledged to fully cover the cost for those newly eligible for the program for three years and then pay no less than 90 percent, Scott’s team is using calculations showing a federal match of less than 60 percent, misstating the state’s burden by billions of dollars.

Staffers within state government had warned weeks ago that the projection did not comply with state estimating law, but Scott continued to try to sell those inflated numbers during a meeting in Washington on Monday.

Scott announced the expansion would require a state commitment of $26 billion over a decade — nearly three times what the state previously projected. However, he did not explain the assumptions that bloated the figure.

“I don’t want to promise something that eventually the state cannot afford,” Scott said in a press conference he called after meeting with Kathleen Sebelius, secretary of the Department of Health and Human Services.

On Wednesday, the state’s Agency for Health Care Administration defended its projection.

It issued this statement: “The agency believes the figures in the December presentation reflect the probable cost to Floridians. Given the current federal fiscal climate and the track record of the federal government in exponentially expanding beyond their original estimates with regard to the health care costs, it is important for the state to consider the potential ramifications of expanding Medicaid as it relates to federal and state fiscal liability.”

Less than an hour later, the agency issued a press release announcing it would provide additional estimates based on “other assumptions.”

At an event in Palm Beach County on Wednesday, Scott said, “Anybody can make any assumptions they want. Here’s what we know: There’s no government program that’s free.”

State leaders face a legitimate conundrum when it comes to deciding whether to buy into the health care expansion, said Robert Bixby, executive director of the Concord Coalition, a nonpartisan organization based out of Washington, dedicated to eliminating federal budget deficits.

Though health care costs have actually fallen in recent years after a dramatic ramp up, estimating future health care costs is a complicated business, Bixby said, in part because they are driven by human behavior.

Lawmakers in Florida may worry that if the Obama administration underestimated costs at a time when Congress is on the hook to tame its deficit-spending ways, the state could be left “holding the bag,” Bixby said. “I think that’s a legitimate issue to think about.”

But publishing estimates based on a suspicion that the federal government won’t pony up smacks of politics, he said.

“If I were doing a cost estimate, I’m not sure you can program in that the federal government is not going to pay (what it pledged) and it would, in fact, pay X percent,” Bixby said. “That’s kind of making something up.”

Scott is not wrong to note that federal programs often do cost more than initially projected. But in the case of the Medicaid expansion, the government would face tremendous obstacles — politically and logistically — if it tried to back out of funding.

Funding levels are written into the Affordable Care Act. That would mean both houses of Congress would have to agree to cut funding, and get the president to sign a new law. And as recent history in Washington has shown, getting any law passed is a hurdle.

To be sure, the Medicaid expansion is a significant commitment by the federal government.

To get states to buy into this aspect of the controversial health care law, the federal government planned a honey and hammer approach. It promised unprecedented financial support for the expansion. But for any state that wouldn’t sign on, it threatened the loss of billions of dollars in existing federal funding.

While the 26 states, led by Florida, that challenged the law lost on every other count, they made a compelling case, the U.S. Supreme Court found, in their opposition to the required Medicaid expansion.

Although some members of the court questioned what could be wrong with the federal government burying states in a “boatload ”of money, a majority said states had been coerced by the threat of the loss of the rest of their Medicaid funding if they didn’t expand.

The court’s ruling left every state free to expand the program or not without risk to their current Medicaid program. To entice states to sign on after the ruling, Sebelius announced governors can take the free money for three years, if they want, and then back out of the expansion. In Florida, the expansion for the first time would include adults without a disability and no children if they earn less than about $15,000 a year.

HHS also decided to put no deadline on states that want to join. If they hold out beyond the first three years, they will get the lower match of roughly 90 percent, Sebelius told governors.

Florida lawmakers are expected to consider the expansion in the upcoming session. As the newest projections made their way to J. Eric Pridgeon, a staffer with the Health Care Appropriations Subcommittee, he warned that they were contrary to federal law and asked them to be recalculated.

Michael Anway, Scott’s health care policy coordinator, intervened.

“The federal government has a $16 trillion national debt, must borrow 46 cents of every dollar it spends, and in 2011 had its credit rating downgraded for the first time in history, ” he wrote in an email to Pridgeon and other staffers, obtained by Health News Florida.

He questioned whether the state could rely on promises of an administration that had until recently supported a plan that would have decreased the rate of federal funding for the Medicaid expansion. He asked that the $26 billion projection be presented as it was written.