March 9, 2017

FPI: US House's "Repeal and Replace" Legislation Gambles with Health of Floridians

Bill would convert Medicaid to per capita caps, shift fiscal burden to the state

LAKE MARY, FL – The Florida Policy Institute (FPI) today called on the U.S. House of Representatives to reject the American Health Care Act (AHCA), legislation working its way through the committee process that would repeal and replace the Affordable Care Act (ACA). While the House leadership’s proposed bill is silent on how many people would be covered or budgetary implications, preliminary estimates reveal that the proposed bill would shift a $370 billion cost to states over a decade and result in millions of Americans potentially losing health insurance coverage and higher premiums and out-of-pocket expenses for those who remain insured.

“The House leadership’s bill — in addition to putting the health and well-being of Floridians on the line — would put a huge financial burden on the state,” said Joseph F. Pennisi, executive director of FPI. “This bill was not even released for public review until two days before mark-up in the Energy and Commerce Committee. This is ill-informed legislation that is being rushed through in an unprecedented process.”

The AHCA would also fundamentally alter the Medicaid program by converting its financing to a per capita cap. Unfortunately, per capita caps would only provide fixed, arbitrary funding per beneficiary, disconnected from need. The state would be 100 percent responsible above the fixed federal funding level. Florida would subsequently have to make difficult choices: raise taxes, cut investment in education and other vital services or impose increasingly harmful Medicaid cuts in eligibility, benefits and provider reimbursement. Medicaid is already efficient, costing much less per enrollee than private insurance and growing at a much slower rate. States would be unable to absorb large funding cuts without cutting coverage or provider payments.

Florida is uniquely positioned to be negatively impacted by the per capita cap financing model. This is due to the following facts:

  • The AHCA would set a base spending cap for 2020 based on Florida’s per enrollee spending in 2016. The inflation factor attached to that cap is projected to be less than the rate of growth. This will put Florida at a great disadvantage. The state’s per enrollee annual spending is already extremely low in Florida ($5,420 compared to $7,766, the US average). Therefore, a per capita cap proposal would lock in the state to an unsustainable starting point which would dramatically decrease over time.
  • While substantial progress has been made under the ACA to reduce the number of uninsured Floridians, the state still has one of the lowest rates of insured residents in the country, ranking 45th in the nation. The AHCA would be a step backward.
  • The state is experiencing explosive growth in the most expensive populations: people with disabilities and the elderly. Florida ranks 6th in the nation for increases in Social Security Income beneficiaries, a 35 percent increase over the past 10 years compared to the U.S. average of 17 percent. Similarly, the low-income elderly population has grown at 25 percent compared to the national average of 14 percent. Florida already has the largest percentage of elderly residents in the country.
  • Open-ended Medicaid federal funding is key to Florida’s capacity to respond to unexpected public health emergencies such as the Zika virus, hurricanes and other unanticipated health care costs. Floridians, often on the forefront of suffering from health care epidemics and natural disasters, would be particularly hurt by capped Medicaid funding.
  • With more uninsured patients and lower payment rates, hospitals and other providers — especially rural and safety net providers — would face higher uncompensated care costs and more unpaid medical debts, squeezing them financially. Florida’s provider payments are already low, and per capita cap funding would only make this worse.

Key questions remain unanswered. How many Floridians will lose coverage under the House proposal? How will this affect the health and economic security of Florida families? Will eligibility and services need to be cut in order to address the enormous cost-shift from the federal budget to the state?

The AHCA puts state and local economies at serious risk as it reduces affordable, quality health care coverage available to Floridians. This is a giant step backwards from policies that ensure widespread economic opportunity and quality of life for all Floridians.

“State policymakers and congressional delegates must critically evaluate the unique circumstances, needs and priorities of Floridians as they review the AHCA,” added Pennisi. “These considerations need to be front and center.”

FPI is an independent, nonpartisan and nonprofit organization dedicated to promoting widespread prosperity through timely, thoughtful and objective analysis of state policy issues affecting economic opportunity.

FPI provides analysis of state budget and revenue trends and proposes commonsense policy options with the aim of encouraging broad public education, discussion and informed action. FPI advances fiscal policies that expand economic opportunity for all Florida residents.

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