George Gibbs Center for Economic Prosperity

Sunsh⁠i⁠ne S⁠t⁠a⁠t⁠e News: Med⁠i⁠ca⁠i⁠d Expans⁠i⁠on Could Cos⁠t⁠ Flor⁠i⁠da $4.1B over 9 Years

By: The James Madison Institute / 2013

As Republican legislators digest public reaction to their decision not to approve Florida’s participation in Obamacare’s optional Medicaid expansion, they’re receiving possible validation from a leading conservative think-tank whose analysis says expansion would cost the state over $4 billion.“There’s no such thing as a free lunch in anything that has to do with increasing government expenditures; the bottom line is, the states are going to have to pay for this,” Drew Gonshorowski, policy analyst at the Heritage Foundation’s Center for Data Analysis, which published the findings March 5, tells Sunshine State News. “Regardless of what you do, it looks rosy in the first three years, but eventually it’s going to cost Florida more than it saves.”Proponents of the Medicaid expansion argue that it would save the states money in the long term by reducing taxpayer costs for uncompensated care, as when indigent sick people check themselves in to tax-subsidized health care institutions that are legally required to treat them in spite of their inability to pay.But according to the Heritage data, which are taken from a November Kaiser Foundation/Urban Institute study, the vast majority of states will see those savings offset by rising costs once the federal government stops footing 100 percent of the bill for the expansion.States that avail themselves of the expansion would, beginning in 2014, have 100 percent of it covered by federal tax dollars. The federal contribution decreases to 95 percent in 2017, 94 percent in 2018, 93 percent in 2019, and to 90 percent in 2020 and beyond.
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Although the Kaiser Foundation study claims that all 50 states would save a combined total of $10 billion in the years 2014 through 2022, from Medicaid expansion, the Heritage Foundation’s breakdown of the data state-by-state show that only 10 states would actually save costs during that nine-year period, primarily New York ($33.8 billion) and Massachusetts ($6.6 billion).The eight other states which, individually and collectively, would be net savers are Connecticut, Delaware, Hawaii, Iowa, Maine, Maryland, Massachusetts, Vermont, and Wisconsin. Every other state, including Florida, would be a net payer.“And this is a best-case scenario,” Gonshorowski warns. “This just assumes that the federal government lives up to what it promises it will pay, but there’s so much uncertainty underlying this. If the match rate goes down to 70 or even 80 percent, states are going to be on the bill for a lot more money.”Gov. Rick Scott has come out in support of Medicaid expansion for the years 2014 through 2016, when the federal government is supposed to pick up the full tab.A February poll conducted by the James Madison Institute reported that 63 percent of Floridians don’t trust the federal government to keep its funding level promises. A second poll, released in March by the Foundation for Government Accountability, reported that 50 percent have little or no confidence in federal commitments.Asked why the 10 states stand to save from Medicaid expansion, while the remainder do not, Gonshorowski said it had to do with the former being able to shift the burden of state-level welfare subsidies onto the shoulders of the federal government.“What’s unique about the other [10] states, is they already have expanded their Medicaid program, on the state level,” he explains. “New York is your biggest culprit: what it has done is expand [Medicaid] so much that when the federal expansion comes into effect they can move a lot of people from the state rolls onto the federal.”
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The Heritage Foundation’s own proposed alternative to Obamacare’s Medicaid expansion is a “Medicaid premium support” program, which would give vouchers to Medicaid-eligible patients, enabling them to shop around for affordable health care. Gonshorowski suggests such a program, by bringing market forces to bear on health care, would help drive down costs for everyone.”It’s not that conservatives want to get rid of a safety-net health care solution; it’s that we believe that you can have coverage and care for individuals that can actually have some cost containment through competitive measures,” he says. The Heritage proposal is similar to that being floated around by some Senate Republicans, including Joe Negron of Palm City, who chairs that chamber’s Select Committee on the Patient Protection and Affordable Care Act (PPACA — i.e., “Obamacare”).Scott’s office did not return requests for comment before this story went to press, but the Florida House Democratic office issued its own response to the Heritage analysis.“House Democratic Caucus members have said that they believe Medicaid expansion in Florida is both affordable and achievable,” Mark Hollis, the Democrat’s communications director, told Sunshine State News. “While various forecasts, such as the model presented by The Heritage Foundation, identify long-range costs of Medicaid expansion, there also are costs associated with forfeiting tens of billions of dollars in available federal funds to our state. When discussing Medicaid expansion, it is important to recognize the potential favorable economic ripple effects it will have on Florida, as well as the tangible benefits it presents to the lives of thousands of Floridians.”
Reach Eric Giunta at or at (954) 235-9116.