Blog: Obamacare is here to stay, but will Florida play along?

Nov 7, 2012

The following article was published in the South Florida Business Journal on November 7, 2012:

Obamacare is here to stay, but will Florida play along?

By Brian Bandell

With the Republican effort to repeal Obamacare coming up short, the health care industry in Florida is waiting to see whether the Legislature will start participating in the law.

President Barack Obama’s re-election and continued Democratic control of the Senate mean a repeal of the Affordable Care Act before its major provisions go into effect in early 2014 is highly unlikely. Florida voters sent a further message as they rejected, by a vote of 51 percent, a constitutional amendment that would have prohibited the government from mandating people to carry health insurance, which is at the heart of ACA.

The U.S. Supreme Court confirmed the legality of the health insurance mandate as a tax this summer.

“Florida Blue has stood for everyone in the country being covered and this is certainly a step towards that,” said Pat Geraghty, chairman and CEO of the Jacksonville-based health insurer.

Florida Blue will continue with its efforts under ACA to move away from fee-for-service provider reimbursements and towards rewarding quality patient care, wellness and prevention, Geraghty said. He plans a big marketing push before the mandate takes effect in 2014 to let consumers know their choices.

It’s now clear a large part of ACA will go into effect, but “there will be adjustments over time, similar to how Medicare evolved over time,” said Steven G. Ullmann, a professor and director of program at the University of Miami’s Center for Health Sector Management and Policy within its School of Business Administration.

Most companies with more than 50 employees offer health insurance, so there won’t be major changes for them, Ullmann said. Some companies with slightly under 50 employees might decide not to grow in order to avoid getting health insurance, he added. For companies of below 50 that want to purchase insurance coverage, their federal tax credit for doing so increases from 35 percent now to 50 percent in 2014.

Just because ACA is staying around doesn’t mean it can’t be changed. Geraghty would like to see the tax increases for medical device manufacturers and health insurance plans stripped from the bill. He said those taxes would be passed on to consumers and could raise premiums.

“We would like to see those revenue increases taken out of the bill so that health care can truly be affordable,” Geraghty said.

Florida to miss deadline for health insurance exchange

ACA allows some companies and individuals would use a health exchange network to shop for insurance coverage at more favorable group rates, but Florida is likely to miss the Nov. 16 deadline to set up an exchange. Governor Rick Scott came out against an exchange and has refused to participate in any aspects of ACA while the Legislature didn’t move on the issue this year. Some Florida Republicans were banking that a Mitt Romney win would mean the end of ACA and make any work on an exchange a waste of time.

State inaction would mean that the federal government sets up a health exchange for Florida and the rules would be written in Washington, D.C.

“The state must take into consideration whether they will allow federal government to run an exchange, if they will do a partnership with the federal government or do a state-operated exchange,” said Michael Garner, president and CEO of the Florida Association of Health Plans. “How do we look at this program to see what the state could potentially do better than federal government and where should we maintain state regulation over these issues?”

Geraghty said Florida Blue will push for the state to take control of an insurance exchange so it can address local concerns, especially regarding demographics, diseases that impact the state’s population and the structure of the health delivery system.

Medicaid expansion on the table

There is still a lot of uncertainty over what will occur at the state level with regards to health care, said Monica Rodriguez, an attorney in the government affairs and public policy practice of Akerman Senterfitt in Tallahassee who represents cities such as Miami and hospitals such as Shands Healthcare. The biggest issues are the scheduled sunset in 2013 of the nearly $1 billion Low Income Pool, which compensates hospitals that treat many uninsured and Medicaid patients, and whether Florida will expand Medicaid.

The Supreme Court decision made the expansion of Medicaid eligibility to 130 percent of the poverty income optional for states.

While the federal government would pay for the initial Medicaid expansion, many Florida lawmakers are worried about the long-term financial implications such expansion once the federal match decreases, Rodriguez said.

Linda Quick, the president of the South Florida Hospital and Healthcare Association, said the election results show that Floridians want to expand Medicaid and trust the federal government to oversee the program. That is important, as Florida is still waiting for word from the federal government on whether it can put most Medicaid beneficiaries into managed care plans.

“The administration is in a stronger position to require things of our state government,” Quick said. “The state has slightly less bargaining power than it had yesterday… The federal administration is in less conciliatory mode and might approve the Medicaid waiver with more conditions.”

Many Florida hospitals are counting on a Medicaid expansion because ACA would greatly reduce disproportionate share dollars that go to hospitals that treat many uninsured patients. This is a crucial issue for urban providers such as Jackson Health System in Miami.

Geraghty said Florida Blue supports the Medicaid expansion because most of the funding would come from the federal government and it would help needy people get health care.

“If health systems around the state don’t get support through Medicaid expansion funding, hospitals and health systems will look to move their expense burden to business customers so businesses would pay a greater premium increase if Medicaid expansion dollars don’t come to Florida,” Geraghty said.

Fiscal cliff and Medicare cuts loom

Two big issues that Obama and Congress need to quickly tackle have a big impact on health care: the fiscal cliff and the future of Medicare.

Quick said the sequestration that would start on Jan. 1 would cost hundreds of thousands of health care jobs. She hopes that Congress applies the cuts to health care with a scalpel rather than an ax.

Ullmann noted that Medicare rates for physicians are set to decrease 26.5 percent on Jan. 1 under a law that Congress passed in 1997 – with those cuts being delayed every year since then. If Congress refuses to make the cut again, Medicare is projected to run out in 2017, Ullmann said.

“It’s always the third rail. You don’t want to touch Medicare because it’s a sensitive issue,” Ullmann said. “It’s becoming critical now and the executive branch and Congress need to future this out relatively quickly or we could be in for some interesting times.”

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