$1B Cut To Hospital LIP Program A Start Toward FL Budget Fix

May 22, 2015

Florida is losing more than half of a critical hospital funding program but lawmakers say they’re grateful to at least have a number they can start building a budget around. Meanwhile the legislature continues to grapple with how to fill substantial budget hole.

Florida Senate President Andy Gardiner says the federal government’s decision to reduce its support for the Low Income Pool, proves what his chamber has said all along: Florida needs to find a new way to pay for care for uninsured Floridians.

“We are getting away from paying on the back end and its better outcomes for everybody if you’re funding insurance options. That’s why the Senate put forward a free-market approach just for this situation."

Gardiner is talking about the Senate’s Medicaid expansion plan, called FHIX. The chamber wants to pull down more federal money to funding private health insurance plans for more low-income Floridians. And Gardiner says increasing coverage—would also stave off steep cuts to hospitals. Some are expecting those cuts to come with drastic decreases in the state’s uncompensated care funding program, called the low-income pool.  

“Whereas this program starts to go away, the Low Income pool, that the residents of the state of Florida have options for insurance and ultimately it protects those with private insurance so their insurance won’t go up," said Gardiner.

The federal government is reducing its support for Florida’s LIP pool by 55 percent. Florida is getting only a billion dollars this year—$600 million is coming from the federal government. It will continue to shrink. The Centers for Medicare and Medicaid services says it won’t cover costs for people who could be insured through a Medicaid expansion.  And that means the state has to decide whether and how to fund a billion dollars more so hospitals will at least break even. At least one hospital, Shands in Jacksonville continues to say it could close if it loses significant LIP money. Georgetown University Medicaid expert Joan Alker says the federal government is sending Florida a message.

“I think part of what they’re saying is you need to take a look at how you’re running your Medicaid program, how you’re paying your providers and now is the time to do that," she said.

In a statement, House Speaker Steve Crisfullli says his chamber is still looking at the budget impact of the Low Income Pool, but that having a number in place will help state budget negotiations going forward. He also praised Governor Rick Scott for his recent, aggressive lobbying for the LIP funding. Crisafulli is still adamant that the LIP money shouldn’t be tied to the question of expanding Medicaid.

And Scott says the move to begin phasing out the LIP program, bolsters his hospital funding commission.  The Hospitals get the bulk of LIP money, and Scott is asking a group of volunteers to dig into their finances.

"It just shows how important it is to go through our commission to see why healthcare costs the way it costs. Whether we should continue certificate of need laws, why some hospitals’ cost structure is higher than others—because we have to figure out how every Floridian can get quality healthcare at a cost they can afford.”

As Florida prepares to address health funding, Scott’s hospital  financing commission has started meeting. The group has been charged with examining where and how hospitals are spending their money, and looking at the sources of their revenue. Hospitals have been backing the Senate’s Medicaid Expansion plan, and they’ve not been supportive of the Governors commission—publicly criticizing both Scott proposal for revenue sharing, which they label a “tax” and noting the commission members have little experience in healthcare. Bruce Reuben is president of the Florida Hospital Association. And he says in state’s the have expanded Medicaid costs have decreased and increases in health insurance premiums has slowed.

“Uncompensated care costs in state’s that have provided this coverage has gone down dramatically. And in all the states that have implemented this coverage, uncompensated care costs are way down," Rueben said.

In its first meeting the hospital commission noted most hospitals generate revenue from government sources like Medicaid, Medicare. That says Rueben, reflects Florida’s economic makeup. About 19 percent of Florida’s population are Medicare-eligible seniors.

“We have about 3.3 million people covered by the Medicaid program. So we have a high number of very low income families. And then we have several million people who have no insurance whatsoever. So in a population of 19 million people, I’ve already listed a population upwards of 10 million."

When lawmakers reconvene for a budgetary special session in June, they’ll be taking a closer look at the Senate’s Medicaid expansion plan. The House will have a workshop on it, but lawmakers aren’t signaling support. Adding to the budget pressure are education-related organizations, which are pushing the state to increase funding. But whether those increases will happen is in doubt as healthcare continues to dominate the conversation.