Gov. Bush proposes Medicaid revamp

"Florida's Medicaid system will collapse under its own weight" without fundamental changes, Bush says.

Published January 12, 2005

TALLAHASSEE - Gov. Jeb Bush on Tuesday proposed dramatic changes to Medicaid that would essentially convert the public health care program for the poor into a government-funded insurance plan.

The changes, which must be approved by federal regulators and state lawmakers, are intended to rein in the program's runaway costs, which are expected to reach $17-billion in state and federal money next year and already gobble more than a fourth of the state budget.

Rather than paying doctors and hospitals directly for treating Medicaid patients, Bush wants the state to pay HMOs and other health networks to cover the cost of caring for 2.3-million people.

To entice insurance companies to take on some of Florida's sickest, poorest residents, the state would cap Medicaid benefits, just as private insurance plans do. That would ease some of the financial risk for insurance companies.

Patients requiring more care would be covered by a catastrophic fund financed through a percentage of Medicaid premiums.

Bush wants the proposal approved by the end of the year, saying it's a last-ditch effort to save the state-federal program. The federal government pays 61 percent of the costs.

"Florida's Medicaid system will collapse under its own weight if we do not fundamentally transform the way it operates," Bush said.

By calculating a premium for each Medicaid patient, plus an "appropriate" rate of growth, Bush said the state can more accurately predict and control its costs, which have seen double-digit increases the past few years.

What's not yet known, Bush said, is whether the required federal approval will come with a cap on federal funding - which could leave the state on the hook for cost overruns - or whether Medicaid patients will pay more.

Both Senate President Tom Lee, R-Brandon, and House Speaker Allan Bense, R-Panama City, praised Bush for taking on the issue and promised to work closely with him. Bush's proposal was met with polite response in other quarters, with many people saying they want more details.

"This sounds like a work in progress," said Sandra Mortham, chief executive officer of the Florida Medical Association. "I'm encouraged because I think they have really tried to look outside the box."

Senate Democratic leader Les Miller, D-Tampa, called the plan "vague."

"It failed to lay out specific details on how services will be provided, who will provide them, or who's ultimately going to account for the billions in taxpayer dollars paying for this risky experiment," Miller said.

Bush called his plan a "framework" and said he is relying on health care professionals to flesh it out.

The proposal calls for managed care companies and other networks to design the plans Medicaid patients would use.

Basic services, such as doctors' visits, prescription drugs, diagnostic tests and emergency services covered by the state's mandatory and optional Medicaid programs would be covered, Bush said. Beyond that, it would be up to the managed care networks to attract patients by offering additional services or conveniences that appeal to them.

For example, a senior citizen might choose a plan that offered better prescription coverage, while a single parent of a sick child might choose a plan that included a network of pediatric specialists.

"We can turn Medicaid beneficiaries into informed consumers," Bush said. He said it is wrong to assume "that poor people can't make choices for themselves."

Medicaid patients who exhibit responsible health care practices, such as having their children immunized or participating in disease management programs, could earn extra Medicaid money for enhanced coverage, such as over-the-counter medications.

Medicaid patients with access to private health insurance could use their Medicaid premium to pay for their share of their employer's health plan costs, Bush said. That worries some social service advocates.

"It's like a voucher for health care," said Karen Woodall, who lobbies for health care for the poor.

The Republican-led Legislature supports Bush in changing what he calls a chaotic, patchwork government program. Lawmakers earlier this year gave him the green light to apply for federal approval without knowing what Bush would propose.

He also has a close ally in the White House, his brother the president.

But recruiting enough experienced managed care companies could prove daunting.

The insurance industry responded to the idea with restrained support.

"It certainly is something we are going to look at very carefully and with great interest," said Bruce Middlebrooks, a spokesman for Blue Cross/Blue Shield of Florida.

The insurance industry's biggest concern appears to be how the state will calculate a premium for each of the state's 2.3-million Medicaid beneficiaries based on an individual's health risks. Bush said this likely will be handled by a private actuarial firm.

Still, insurance and managed care companies that already serve Medicaid patients recognize the problem with spiraling Medicaid costs and know that doing nothing could result in cuts in reimbursements that reduce their revenue, said Robert Wychulis of the Florida Association of Health Plans.

"I don't think that's a bad approach, and I think the private market will respond," Wychulis said.

"If I'm a betting man, I'm going to bet with the governor on this one," Wychulis said.