An Economic and Policy Analysis of Florida Medicaid Expansion
March 21, 2013
The Affordable Care Act originally envisioned that all states would expand Medicaid eligibility to 138 percent of the federal poverty line or risk losing federal matching funds. This provision was subsequently struck down by the Supreme Court and now states have the option to decide whether or not to expand Medicaid eligibility. For the state of Florida, expanding Medicaid will cost more, burden Florida's supply of physicians and displace private insurance, say Devon M. Herrick and Linda Gorman, senior fellows at the National Center for Policy Analysis.
- The federal government would pay 100 percent of the cost of benefits for adults for three years but this reimbursement rate would drop to 90 percent in 2020.
- Up to 1.6 million additional Floridians could enroll in Medicaid and more than 250,000 of these would be eligible for the existing federal match rate of 59 percent because they were previously eligible but never enrolled.
- The remaining 1.3 million individuals would qualify for the declining federal match and require Florida to increase general revenues allocated to Medicaid from $6 billion in 2008 to nearly $24 billion in 2030.
Florida's physicians will struggle to meet the needs of an increased demand for health care following the addition of new Medicare patients. In the next 17 years, Florida's population is expected to grow by 25 percent and its senior population will grow by 75 percent.
- In Florida, Medicaid pays about half of what private insurers pay, which will exacerbate the shortage of doctors willing to treat Medicaid enrollees.
- Medicaid patients will soon find that they have reduced access to care, as only about 41 percent of Florida physicians will accept new Medicaid patients.
- States that expand Medicaid will assume higher costs because many new enrollees will drop private insurance to take advantage of the public option.
While the Medicaid plan seems generous on paper, enrollees have worse health outcomes than people with private plans. Expanding Medicaid would result in an additional $1.5 billion in spending but, contrary to many claims, it is hard to prove that Medicaid expansion would significantly boost the economy.
Given the current fiscal outlook, it is doubtful that the government can maintain all of its commitments and obligations. For Florida, Medicaid expansion would result in unnecessary costs. Families between 100 percent and 138 percent of the poverty line would be better off if they enrolled in private coverage or subsidized coverage in the health insurance exchange.
Source: Devon M. Herrick and Linda Gorman, "An Economic and Policy Analysis of Florida Medicaid Expansion," National Center for Policy Analysis, March 2013.
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