Florida Senate Republicans Vote to Expand Obamacare and Medicaid, Rejecting House's Free-Market Alternative

On April 11, the GOP-controlled Florida House of Representatives passed an innovative, consumer-driven replacement for Obamacare’s Medicaid expansion, one that could be a national template for free-market health reform. But Republicans in the state Senate rejected the House plan, electing instead to expand Medicaid, as Obamacare prescribes. Senate Republicans’ inexplicable decision makes it likely that free-market reform will fail in Florida, an outcome that could easily have been avoided.

Here’s what happened. In February, Florida Gov. Rick Scott announced that he supported the implementation of Obamacare’s Medicaid expansion in the Sunshine State. It was a striking flip-flop for the governor who spent millions of dollars of his own money fighting Obamacare, and had sworn earlier that he would not implement the law’s Medicaid expansion.

However, Florida’s Republican-controlled legislature was cool to the governor’s proposal. Indeed, both the House and the Senate voted to reject Gov. Scott’s Medicaid-expanding budget. But after that, the House and Senate moved in different directions.

The Florida House’s innovative market-based reform

The House, led by Speaker Will Weatherford and PPACA Committee Chairman Richard Corcoran, passed a bill in which uninsured adults with children would receive $2,000 a year—plus their own contribution of $300—to fund a health savings account called a CARE account, which recipients could use for any health expense of their choice. They could use it to buy catastrophic coverage, or a high-end concierge primary care physician, or anything in between. In order to benefit from the subsidy, recipients would have to meet work requirements similar to those in the landmark, bipartisan 1996 welfare-reform law.

The House bill echoes many of the features of recent national conservative health-reform proposals. In 2008, GOP presidential nominee John McCain proposed offering every American a $2,500 tax credit with which to buy the health coverage of their choice. In 2011, Paul Ryan proposed a similar plan, using universal tax credits worth $2,300 per individual. Six months ago, Jim Capretta of the American Enterprise Institute proposed a universal tax credit of $2,500 for individuals, along the same lines.

The Weatherford-Corcoran proposal is a state-based version of the same idea. Indeed, it would be the first such plan passed in any U.S. state, one that could help law the groundwork for broader, market-based reforms. It would cover 55 percent of the Florida population eligible for Obamacare’s Medicaid expansion, but would do so in a far more cost-effective manner. "The Florida House has developed a plan that will fit the needs of Florida, not the requirements of Washington," said Weatherford.

Rick Scott, however, is having none of it. The House plan, said Scott, "will cost Florida taxpayers on top of what they are already taxed under the President’s new health care law [and] would be a double-hit to state taxpayers." But Scott is factually incorrect. New state Medicaid spending, under Obamacare, would exceed $1.3 billion a year in 2022; the House proposal would cost $237 million a year.

The Florida Senate votes to expand Medicaid

The Senate, however, voted down the House plan. Instead, the Senate passed a bill proposed by Sen. Joe Negron, Chairman of the Senate Appropriations Committee, which would expand Medicaid using private insurers, a plan he calls "Healthy Florida." Because the Senate bill enlists private insurers to manage the Medicaid program, Sen. Negron claimed that it doesn’t count as a Medicaid expansion. "We’re not putting one more citizen of Florida into the Medicaid program," claims Negron.

That will come as a surprise to the U.S. Department of Health and Human Services, which issued in March a memorandum clearly stating that anyone who takes federal dollars to cover the population slated for the Medicaid expansion would be governed by the Medicaid statute. "Under all these [private insurance] arrangements," wrote HHS, "beneficiaries remain Medicaid beneficiaries and continue to be entitled to all [Medicaid] benefits and cost-sharing protections."

Negron knows this. Page 19 of the legislative summary of his bill, prepared by his own staff, reads:

(Emphasis added.) In other words, Negron’s bill expands Medicaid, as Obamacare prescribes, and does so under the jurisdiction of the federal Medicaid statute. Full stop, end of story.

Negron goes further, claiming that his Medicaid expansion is conservative, because it would require a greater degree of cost-sharing with the beneficiary. "We want to make sure that everyone pays something. It’s only fair that if you’re getting a little assistance, and getting health insurance, that you have co-pays and deductibles, that you have incentives for healthy living."

In fact, it would be illegal for the State of Florida to require Medicaid beneficiaries below the poverty line to pay meaningful co-pays and deductibles, like those in the private insurance market. As I noted above, HHS requires, as a condition of accepting the federal money, that states apply Medicaid’s "cost-sharing protections" to this population: that is to say, states are barred from asking beneficiaries to pay more than a few dollars for most health-care services, including non-urgent use of the emergency room.

Gov. Scott was pleased with Negron’s efforts. "It’s consistent with what I said I would support," says Scott.

Democrats take advantage of GOP division

Democrats, unsurprisingly, have sided with Gov. Scott and Senate Republicans over their more market-oriented colleagues in the House. Yesterday, House Democrats initiated a "nuclear option" parliamentary maneuver that requires all bills to be read in full in the lower chamber. With the Florida legislative session about to end, the quasi-filibuster has stalled other legislative proposals, such as a ban on texting while driving.

"By purposefully slowing deliberations at this critical juncture," said House Minority Leader Perry Thurston, "I and other House Democratic Caucus Members seek to bring greater public attention to our desire for legislative passage of the health coverage expansion plan that the Florida Senate approved earlier today." In order to maintain the stalling maneuver, Thurston needs to keep 41 of his 44 House Democrats on board.

Negron should at least pass the House bill, and give it a chance to work. If it fails to provide adequate coverage, the state can always revise it, or expand Medicaid at a later date. But once the state expands Medicaid, it will be extremely difficult to reform, and it will never get rolled back, regardless of what Sen. Negron says.

In effect, Sen. Negron and his Republican colleagues in the Senate have triggered a stalemate that may prevent market-based health reform from taking place in Florida. There are only two days left in the Florida legislative session. Negron says that it’s "unlikely" that the House and the Senate will come to agreement, that it "might be a bridge too far." Negron and Gov. Scott are snatching defeat from the jaws of victory. It’s a remarkable development, one which Florida taxpayers should view with consternation.

This piece originally appeared in Forbes

This piece originally appeared in Forbes