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State faces $1-billion Medicaid shortfall

An ''information breakdown'' blinded lawmakers to a looming budget crisis that threatens health programs for the needy.

By DIANE RADO

© St. Petersburg Times, published March 8, 2001


TALLAHASSEE -- Lawmakers are struggling with the worst budget crisis in a decade, a $1-billion hole in the Medicaid program that threatens health programs for Florida's neediest families.

How did the state get into such a mess?

The popular explanation, often cited by Gov. Jeb Bush and his staff, is that Florida got so aggressive about signing up poor children for health insurance that Medicaid cases skyrocketed.

Seldom mentioned is that state officials, including budget officials in Bush's office, seriously underestimated the number of Medicaid recipients that Florida would need to cover.

In turn, the Legislature didn't budget enough money for the programs for poor pregnant women, children, the elderly and disabled people -- in 1999-2000 as well as in the current fiscal year.

Unaware that a Medicaid crisis was looming, lawmakers passed historic tax cuts and spent hundreds of millions on pork-barrel projects to impress the folks back home.

Jim LaCrosse, a senior analyst on Medicaid cases for the Legislature, said part of the problem was that the state Department of Children and Families, which reports to Bush, didn't provide key information that would have helped estimators better judge how much Florida would need to spend on Medicaid.

"There was kind of an information breakdown," said LaCrosse, who works for Legislature's Office of Economic and Demographic Research.

LaCrosse joins officials from the Legislature, governor's office and state agencies in forecasting how much the state will have to spend on Medicaid each year. The Legislature relies heavily on the estimates to build a state budget.

At a meeting in February 2000, just before the spring legislative session was to begin, the forecasters estimated that Florida would need to cover an average of 1.7-million Medicaid cases a month in the 2000-01 budget year that would begin July 1, 2000. The Legislature approved enough money to pay for those cases.

As it turned out, the estimate was off by 110,793 cases a month, creating a $236-million deficit in the current Medicaid budget. In addition, state officials now say there is a $56.6-million deficit in the 1999-2000 Medicaid budget as well. And the forecasters have readjusted their numbers for next budget year, estimating that Florida will need another $651-million to pay for more Medicaid cases than expected. In all, the Medicaid hole adds up to $943.6-million.

LaCrosse said forecasters weren't made aware that the Department of Children and Families, which determines who is eligible for Medicaid, had instituted key policy changes in late 1999 that would lead to a significant leap in Medicaid cases.

"Had we understood what those policies were, I'm sure we would have made adjustments" to the Medicaid estimates, LaCrosse said.

The policy changes stemmed from national welfare reform legislation in 1996 that got people off welfare and into work. Though they were no longer getting cash assistance from the government, those clients could still be eligible for health care under Medicaid.

But initially, Medicaid cases dropped after welfare reform was instituted. As states moved aggressively to make sure clients who were eligible enrolled for Medicaid, the Medicaid caseload began rising again.

Florida began working in 1996 to make sure former welfare clients were enrolled for Medicaid, but all the policies in this area weren't implemented until the fall of 1999, said Linda Dilworth, director of the office of Economic Self Sufficiency Services at Children and Families.

Dilworth said her office did keep the Agency for Health Care Administration, which oversees Medicaid, informed of the policy changes that would affect Medicaid cases. "As part of the executive branch, we all kind of work together, but sometimes you put information out there, and I just don't know if it's always absorbed," Dilworth said.

Bob Sharpe, in charge of Medicaid at the Agency for Health Care Administration, said he did not attend meetings of the Medicaid forecasters last year, but that his staff has indicated policies were discussed that would affect Medicaid cases.

However, since the Medicaid deficit was discovered this past fall, his agency has been working more closely with Children and Families to go over policies that can cause a rise in Medicaid cases, Sharpe said. Dilworth also said her agency is working more closely with Medicaid forecasters since the deficit was discovered.

The governor's office acknowledged Wednesday that Medicaid estimates were seriously off, but Bush spokeswoman Katie Baur said that was not a result of a communications failure. She insisted that the forecasters were aware of policies that would affect Medicaid cases, although they weren't sure of their fiscal impact.

Michael Hansen, a member of Bush's budget staff who handles Medicaid, could not recall if he attended the Medicaid forecasting meeting last February. That was the meeting in which LaCrosse said key information wasn't provided to forecasters.

The governor's office largely attributes the rise in Medicaid costs to the spiraling cost of prescription drugs and the increased efforts to sign up poor children for health insurance.

In fact, Bush boasted of the record number of poor children with health insurance during his State of the State speech Tuesday. Some people call this a deficit, Bush said. "I call it good public policy."

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