The state’s chief economist has warned the staff of Gov. Rick Scott that his Medicaid cost estimates are wrong, but Scott keeps using them anyway, according to e-mails obtained by Health News Florida.
Scott says he opposes expanding Florida Medicaid because it would cost too much: $63 billion over 10 years, he says, with the state paying $26 billion of that.
But those numbers are based on a flawed report, according to a legislative budget analyst and State Economist Amy Baker. A series of e-mails obtained by Health News Florida shows the analysts warned Scott’s office the numbers were wrong weeks ago, but he is still using them. He cited them in a Tampa Bay Times op-ed on Sunday and at at a Washington press conference on Monday (see YouTube video).
The flawed report, “Estimates Related to the Affordable Care Act,” was sent to members of the Legislative Budget Commission on Dec. 17. Three days later, two of the recipients pointed out the faulty assumptions and sent it back to AHCA for a do-over. They said it would violate Florida law to proceed with the estimate.
But Michael Anway, Scott’s new coordinator for health policy and budget, sent an e-mail Friday to the others saying he will submit the original estimates as an “alternative forecast” when the revised AHCA report comes before the next budget estimating conference.
Anway said he doesn’t believe the federal funds will come through. “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 explanation.
Anway joined Scott’s staff in early December after working for members of Congress, then for the Pharmaceutical Research and Manufacturers of America, or PhRMA. The Center for Responsive Politics’ web site Open Secrets.org names Anway on its list of people in the “Revolving Door,” who go from the government to industry lobbyist and back.
The AHCA cost estimates sent out in December came from the staff of Tom Wallace, Medicaid finance chief, the e-mails showed. The estimates immediately raised eyebrows because they had tripled since August.
AHCA spokeswoman Michelle Dahnke said the estimates were updated after rules for the Affordable Care Act were released by the U.S. Department of Health and Human Services.
However, a closer look at the assumptions on which the calculations were based showed that the estimates zoomed mainly because AHCA decided not to count the increase in federal funds included in the Affordable Care Act.
The Act says the federal government will pay the lion’s share of the cost for new Medicaid eligibles if a state agrees to expand its program – a decision the Supreme Court left up to the states. The federal contribution for the new eligibles would be 100 percent between 2014 and 2016, then would taper after that to 90 percent by 2020 and stay there.
But the AHCA report assumes the federal match for the new patients would be much lower, about 58 percent. It came up with that by averaging the match amount over the past 20 years.
The report doesn’t say why the authors made that assumption. AHCA declined multiple requests to interview Medicaid officials familiar with the reasoning.
According to the e-mail trail, the first state official to call the AHCA estimates into question was J. Eric Pridgeon, on the staff of the House Health Care Appropriations Subcommittee. On Dec. 20, he wrote to Wallace that the federal revenues for Medicaid expansion states are part of the Affordable Care Act and therefore can’t be omitted without breaking Florida law.
Baker, director of the Legislature’s Office of Economic & Demographic Research, agreed with Pridgeon and asked Wallace to redo the report.
As Health News Florida reported on Dec. 21, the AHCA estimates were huge in comparison to a study released by the Urban Institute and Kaiser Family Foundation, two neutral research groups that specialize in Medicaid studies. Their study estimated that if Florida expands Medicaid, the 10-year cost to the state would be around $8.9 billion, and about 1.6 million more people would be covered.
And even that might be an overstatement, the authors said, since they did not account for savings to state and local governments that now spend on care for the uninsured.
Two other recent studies, by Georgetown and University of Florida researchers, found a net gain to the state from Medicaid expansion.
–Carol Gentry, Health News Florida
Scott to Look at Other Medicaid Cost Estimates
Note: After Health News Florida’s Carol gentry broke the story above, the governor’s office appeared willing to look at additional numbers. Gentry’s follow-up story is below.
Gov. Rick Scott is willing to look at estimates on the cost of Medicaid expansion other than the ones he has been using, according to a release Tuesday evening.
The statement from Scott’s Communications Director Melissa Sellers came in apparent reaction to Health News Florida’s report early Tuesday headlined “Legislative Analysts told Scott His Medicaid Estimates Are Wrong (But He’s Using Them Anyway).”
That report, based on a series of e-mails among state officials, was picked up by numerous other publications, including the Associated Press. PolitiFact looked at the source of Scott’s numbers and found it so flawed it ruled Scott’s statements “false.” And some public officials, including U.S. Rep. Kathy Castor, D-Tampa, issued statements critical of the governor.
In several public statements, Scott has cited $26 billion as the 10-year cost of Medicaid expansion, saying he got it from the Agency for Health Care Administration. AHCA estimated the total state and federal 10-year cost at $63 billion.
AHCA is part of the executive branch and its chief, Liz Dudek, reports to Scott.
The state’s chief economist Amy Baker and Eric Pridgeon, a House budget analyst, sent e-mails to AHCA and Scott’s staff Dec. 20 advising that the estimates could not be used because they’re based on a flawed assumption. AHCA assumed that the federal government would not come through with the money promised under the Affordable Care Act to states that expand Medicaid.
Baker and Pridgeon asked AHCA to correct the assumptions and re-do the estimates. That work, by Medicaid Finance Bureau Chief Tom Wallace and his staff, is reportedly under way.
Last Friday, Scott’s health policy and budget staffer Mike Anway sent an e-mail to Baker saying he wants to present the AHCA numbers as an alternative estimate to whatever AHCA comes up with. Anway said he believes the AHCA estimates because he doesn’t trust the federal government to come through with the money.
Tuesday evening, after a day of criticism provoked by the article, Scott spokeswoman Sellers released this statement:
“The discussion underway now about the cost of adding people in Medicaid under the new healthcare law is incredibly important. Gov. Scott is focused on improving the cost, quality and access of healthcare for Florida families. When he met with (Health and Human Services Secretary) Sebelius yesterday in Washington, they discussed the AHCA cost estimate report and the Governor’s concerns about how taxpayers could afford to nearly double the number of people in Medicaid.
“AHCA’s report concluded that adding people to Medicaid under the new law would cost Florida $26 billion over 10 years. Others have asked AHCA to use different assumptions to calculate different cost estimates. We look forward to reviewing those cost estimates as well.
“There are three things the Governor has stressed that remain unchanging in this important discussion about cost estimates. First, growing government is never free. Second, the number of people in Medicaid would nearly double with the new law (from approximately 3.3 million today to over 6 million). And third, once government grows, it is almost never undone. The fiscal cliff debate in Washington is proof enough of that. Additionally, as the AHCA report points out, federal projections on growing government have a long history of being much lower than actual costs.
“Beyond understanding the cost of adding people in Medicaid, the Governor believes it is important that any healthcare decision improve the quality of services available to Floridians at a cost they can afford.”
Shortly before the Scott statement came out, Rep. Castor released one saying she was “outraged” when she read the information in the Health News Florida report. She obtained the e-mails that the article was based on to review them herself.
“Not only did Gov. Scott manufacture flawed cost estimates, but it appears he had been advised that the numbers were flawed and used them anyway,” Castor said. “Florida Legislative Appropriations staff advised the governor’s office that the numbers were misleading, but it appears that the governor ignored it.”
“Clearly this was not a mistake,” Castor said in the statement. “Knowing that the numbers are wrong and using them anyway is.”