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Rick Scott's negotiated surrender on Medicaid: The story behind the story

Florida Gov.
File Photo: Gov. Rick Scott expresses his disappointment about the supreme court's decision concerning the health care bill at a news conference on Thursday, June 28, 2012, in Tallahassee, Fla.   (Photo by Steve Cannon/AP Photo File)
File Photo: Gov. Rick Scott expresses his disappointment about the supreme court's decision concerning the health care bill at a news conference on Thursday,...

Florida Gov. Rick Scott sounded almost progressive this week as he announced that he would back the expansion of Medicaid to cover nearly a million more low-income Floridians next year. In a stunning reversal of tone and substance, one of the nation’s fiercest opponents of health care reform said he could not, “in good conscience, deny the uninsured access to care,” as 18 other Republican governors have recently pledged to do. “Quality healthcare services must be accessible and affordable for all,” he said in his announcement on Wednesday―“not just those in certain zip codes or tax brackets.” He even evoked personal experience to explain his change of heart. “A few months ago, my mother passed away,” he said, “and I lost one of the only constants in my life. Losing someone so close to you puts everything in a new perspective . . . especially the big decisions.”

It may all be true, but Scott’s announcement was also the climax of a delicate balancing act that he has performed ever since the Supreme Court upheld the Affordable Care Act, aka Obamacare, last summer. While speaking darkly of the ruinous cost that a Medicaid expansion would impose on Florida taxpayers―even if the federal government paid the lion’s share of the cost―Scott has also been seeking federal clearance to privatize the state’s Medicaid program. On Wednesday morning, the Obama administration agreed in principle to grant the waiver he wanted. His announcement on Medicaid expansion came just hours later. The expansion is clearly good news for the hundreds of thousands of uninsured Floridians who will gain access to health coverage next January. But the state’s privatization scheme is a controversial experiment that has its own potential downsides.

In a bid to contain Medicaid costs, the Florida legislature voted two years ago to move participants into private, for-profit HMOs and managed care plans, which contract with the state to provide basic services for flat fees. That arrangement can cut costs, by taking away providers’ incentive to run up wasteful bills, but it can degrade the quality of care by encouraging providers to scrimp on the care people need. Roughly a million Florida Medicaid patients have already joined private Medicaid plans, either voluntarily or through small pilot projects that enroll elderly patients automatically. No one has studied the effects on care, but advocates complain that the private providers have denied many patients the services they need. “Whenever you inject the profit motive into medical decision-making, there’s a tension between patients’ interests and stockholders’ interests,” says State Rep. Mark Pafford. "We haven’t seen any hard evidence that privatizing Medicaid will actually help people.”

The feds aren’t taking Scott’s word for it. In a letter affirming its “agreement in principle” to let Florida privatize Medicaid for the next three years, Obama’s Department of Health and Human Services listed a number of conditions the state would have to satisfy to move forward. The letter calls for goals and strategies to improve the quality of care, and it demands rigorous, independent monitoring of the experiment’s impact. The letter also calls for “enhanced strategies” to get “robust community input” on how best to manage the effort. And it demands that state officials cooperate with their federal partners to ensure that participants can “navigate and access long-term care services and supports.”

So Scott gets three years to prove that privatization works, and he insists that he’s giving the feds only three years to prove that expanding Medicaid is the best way to care for the state’s most vulnerable residents. To reassure fellow Republicans that he’s not raising “a white flag of surrender,” Scott stipulated that the state legislature would have to renew the Medicaid expansion in 2017, when federal support starts declining from 100% toward 90%. But that provision looks more like a face saver than a serious threat to reform. “I believe in a different approach,” he said in announcing his decision. “But, regardless of what I―or anyone else―believes, a Supreme Court decision and a presidential election made the president’s healthcare mandates the law of the land.” With HHS provisionally backing the state’s privatization plan, Republican legislators may now have the political cover they need to go along with Scott on the expansion. They certainly have practical incentive. As Scott put it this week, “Our options are either having Floridians pay to fund this program in other states while denying healthcare to our citizens―or using federal funding to help some of the poorest in our state with the Medicaid program as we explore other healthcare reforms.” Call it a negotiated surrender.

Read more about Obamacare and the countdown to 2014, and look at your own state’s health ranking.