Cutting Health Care, Florida-style

When you’re headed in the wrong direction, running to the front of the crowd and yelling charge may not be the best strategy. 

On Monday, Governor Rick Scott of Florida did this when he proposed his new state budget. 

Like every state, Florida has struggled over the past few years as state revenues have declined.  The Center on Budget and Policy Priorities has documented just how tough that job has become – at least 21 states have already proposed budgets this year with inflation-adjusted spending below 2008 levels.  

In presenting his bare-bones $66 billion budget, Governor Scott promised to bring new business principles to state government.  The problem is that he forgot an old one.  If you don’t increase the supply of a product when demand goes up, you’re going to pay an increased price. 

He proposed $4 billion in cuts (over two years) from current Medicaid levels.  Medicaid is almost 30% of the state budget, and cutting it would help him close a budget gap caused by reducing taxes on corporations.

The problem is that Medicaid is a product in high demand.  Almost 3 million people in Florida were on the program as of the beginning of the year, an increase of a quarter of a million from one year ago.

Why is demand so high?  Three reasons stand out:

• because over 400,000 of Florida’s senior citizens can’t afford the cost of nursing care without it;
• because over 250,000 of Florida’s adults with disabilities like mental illness can’t work and otherwise survive on meager Supplemental Security Income;
• because over 1 million children under the age of 10 and another half million other poor children have no other health insurance. 

The only purpose of Medicaid is to give health care providers some modest reimbursement for the services they provide to these elders, people with disabilities, and low income children and their families.

There are two ways to cut from Medicaid today, and neither is in the public’s interest. 

The first is to pretend that providers are making a windfall off the program (they’re not) and to cut reimbursement rates to hospitals and nursing homes.  In 2009, Florida cut Medicaid rates to nursing homes by 10.5% percent, and in 2010, it cut Medicaid rates to hospitals and nursing homes by 7%.  Governor Scott wants to take another 5% this year.  When rates are cut, patients get less care, and providers get the blame. 

The second is to cut services from the program.  The Governor proposes to do this by making care more “consumer-directed.”  This sounds good until you imagine the 85 year old nursing home patient, the 8 year old child, and the 58 year old person with schizophrenia “directing” their own care.  It’s easy to see how this strategy might result in them receiving fewer services.   

A far better approach to reducing Medicaid costs is to invest in people’s health.  Healthier people don’t need as much medical care.  This is just common sense. 

If we don’t increase the supply of health programs soon, states are going to pay a big price.  Florida had 181,000 65-74 year olds on Medicaid last year.  This number grew by 10% to 199,000 this year.  It had 60,000 60-64 year olds on Medicaid last year, and this number increased to 67,000 this year. 

There are older, sicker, people headed for Medicaid in the future, and the only variable we can do anything about is the “sicker” one.

However, Florida’s governor thinks we should cut health programs a half billion dollars, and opposes implementing all of the provisions of health reform – even those designed to make our population healthier. 

As a result, he is sealing Florida’s fate.  Florida’s Medicaid program will continue to grow because of what Governor Scott is advocating today.  We need a better strategy than his.

Unfortunately, it’s hard to see one coming from the Legislature.  Florida’s version of March Madness is its annual 60-day legislative session.  Thinking long term is a luxury in that time frame, and legislative leaders are preparing their own short-term cut lists.

One of them would keep Medicaid in play for people with behavioral health problems, but reverse a small increase in the Governor's budget by eliminating every other state program serving them. 

 According to the Mental Health Association of Palm Beach County, Florida is meeting just over a quarter of the service needs of adults with substance abuse disorders, ranking 35^th in the nation in per capita spending for substance abuse services, and 49^th in spending for mental health services. 

Where the public interest is concerned, this strategy is scarily short-sighted.  Ten years ago, child welfare advocates were telling policy leaders that children whose parents abused drugs and alcohol were almost three times more likely to be abused, and we know that both substance abuse and child abuse are among the pre-conditions for violent behavior later on.

Actions have consequences.  Bad strategies lead to bad outcomes.