Florida's soaring Medicaid costs cry out for radical cuts, and Gov. Rick Scott, a former health-care executive, is prepping for surgery.
Already consuming more than a quarter of the state's budget, Medicare expenses are expected to climb even faster under Obamacare.
A study by the conservative Cato Institute projects that Florida's Medicaid bill will jump 11.3 percent in 2014, when the federal health-care law is scheduled to take effect. The state's Medicaid tab will increase another 22.4 percent over the subsequent 10 years, Cato estimated.
The big cost driver will be new participants. In its effort to broaden coverage, Obamacare will expand Medicaid eligibility to anyone earning 133 percent of the federal poverty level ($29,327 for a family of four in 2010).
Currently, 3 million low-income Floridians are served by Medicaid at a cost exceeding $19 billion. That's hardly a bargain.
To put the figures in perspective, Britain's National Health Service -- which covers all 55 million citizens of that country -- accounts for 17 percent of the national budget.
Florida, by comparison, expends more than 25 percent of its budget to serve just 3 million people on Medicaid. And that spending doesn't count the billions of dollars in federal contributions that subsidize the program.
Unless Tallahassee can find a way to stanch the fiscal hemorrhage, the state's costs will run even higher, thanks to Obamacare.
State Sen. Joe Negron, who has been tasked to come up with cost-saving proposals, says he hopes to turn Medicaid "into more of an insurance company than a government benefit. What I don't want to pay for is the advice and guidance business -- what people should eat and how they should live."
But Negron's around-the-margins approach doesn't go nearly as far as some reformers advise.
Heritage Foundation, another Washington, D.C.-based conservative think tank, says large states such as Florida would be best served by opting out of Medicaid altogether.
"Florida would save up to $3.8 billion in 2014 and save $28 billion over the first five years," said senior research fellow Edmund Haislmaier.
By opting out of Medicaid and going its own way, Florida could design its own program and cut red tape, said Haislmaier, who noted that his cost-saving estimates were contingent on Obamacare's rules as presently understood.
Cato furthers the case for opting out by noting that under Obamacare, the financing of Medicaid becomes "highly inequitable."
"For every $1 in costs imposed on each working-age California adult, Floridians and Texans will pay nearly $4, Illinoisans will pay nearly $6, and New Yorkers will pay nearly $12," reports Cato senior fellow Jagadeesh Gokhale.
Negron says the "opt-out" option isn't on his agenda, but Gov. Scott is more receptive to bold prescriptions.
The former head of the Columbia/HCA hospital chain has proposed giving Medicaid recipients vouchers to purchase private health insurance. Scott and other free-marketeers believe the state would gain substantial savings because individuals are more likely to be economy-minded if the money is theirs to budget and spend.
Florida would need a federal waiver to make such a fundamental change in health-care coverage, but Scott appears determined to move forward as the state challenges Obamacare in the courts.
The governor's economy measures will surely encounter resistance from minority Democrats and perhaps even some status-quo Republicans.
Attempting to soft-pedal current Medicaid outlays, state Sen. Eleanor Sobel, D-Hollywood, said, "We're not really spending a lot compared to other states." She said Florida's per-capita spending ranks 45th in the nation.
That's a shaky justification.
As the cost comparison with Britain illustrates, Florida spends a higher percentage of its budget on just 3 million Medicaid recipients than England's oft-criticized "socialized" system expends in serving that country's entire population.
And that's Florida's tab before Obamacare sends costs even higher by piling more layers of bureaucracy onto the rickety, inefficient Medicaid program.
Scott, who has vowed that Florida will outdo Texas as a model for cost-conscious reforms, is surely looking to the Lone Star State as Gov. Rick Perry considers quitting Medicaid for an estimated saving of $46.5 billion over five years there.
Explaining the mechanics of Medicaid severance, Heritage's Haislmaier said the program's low-income clients would receive federal subsidies to buy private insurance through state exchanges, also due to take effect in 2014.
States opting out of Medicaid would become wholly responsible for remaining Medicaid patients who require nursing homes and other long-term care, for premiums and other Medicaid costs for Medicare beneficiaries.
But Haislmaier says that would still be a net gain for Florida because everyone else would go into the insurance exchanges.
"Florida would save up to $3.8 billion in 2014 and save $28 billion over the first five years," he projects.
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Contact Kenric Ward at kward@sunshinestatenews.com or at (772) 801-5341.
