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Aaron Sharockman
By Aaron Sharockman January 8, 2013

Rick Scott ignores flaws in state study, says Medicaid expansion will cost Florida $26 billion

Gov. Rick Scott is using a questionable state "study" as evidence that the federal health care law will cost the state billions of additional dollars.

In an guest editorial written for the Tampa Bay Times on Sunday, and again on Monday during a Washington, D.C., press conference, Scott cited a state analysis that says the health care law would cost Florida taxpayers $26 billion over the next 10 years.

The money would be needed, Scott says, to pay for expanding Medicaid, a government-run health insurance program for the poor.

"As you know Florida's Agency for Health Care Administration put out their estimate of what the expansion would cost just for Florida taxpayers and it's over $26 billion," Scott told Washington reporters after meeting with Health and Human Services Secretary Kathleen Sebelius.

Don’t believe that number.

In this case, the Agency for Health Care Administration -- an agency Scott directs -- did indeed release a presentation that concluded that Florida taxpayers would be asked to pay $25.8 billion over 10 years to implement an expansion of the Medicaid system.

But the state study relies on questionable or downright misleading assumptions to reach its eye-popping figure.

We can’t say what the cost will be to the state -- and if there will even be one. Outside groups such as the Kaiser Family Foundation, for instance, have estimated the additional cost to the state would be a little more than $1 billion between 2013 and 2022.

The state figure, however, ignores a fundamental component of the health care law -- namely that the federal government will pay for most of the expansion.

This requires a little bit of explanation, so bear with us.

One of the key components of the new federal law, and one of the components that Scott and Republicans particularly dislike, is that most Americans will be required to have some form of health insurance or pay a penalty.

As a result, the federal government wants to expand Medicaid coverage to cover more Americans who are poor.

States, which manage Medicaid, can decide whether to expand the program or not, but to make the option enticing, the federal government offered to pick up most of the costs to cover more people.

Over the past 20 years, the federal government has paid for about 58 percent of the costs for current Medicaid recipients. Under the expansion, the government would pay 100 percent of the costs for newly eligible Medicaid recipients for the first three years (2014-16). In 2017, the federal government would cover 95 percent of the costs, 94 percent of the costs in 2018, 93 percent of the costs in 2019 and 90 percent of the costs in 2020 and beyond.

Why is this breakdown so important?

Because the state study ignores it completely.

The state study calculates the cost of the expansion based on the federal government paying for only about 58 percent of the costs.

Also, the most recent cost estimate from the state -- which was published in December -- includes revisions that only add to the theoretical state bill, according to our analysis. Among them:

• In a January 2012 report, the state assumed people who are now eligible for Medicaid but not enrolled would slowly transition into the health care program over a period of three years. In the most recent report, the state said they would all enter Medicaid immediately.

• Similarly, the January 2012 report concluded that just 40 percent of newly eligible Medicaid recipients would enter the system in 2014. By December 2012, the number had been revised up to 60 percent.

It’s hard to quantify the dollar impact on any one change based on the information provided by the state in its estimates.

When we asked for details on these assumptions, Michelle Dahnke, a spokesperson for the Agency for Health Care Administration, said the state simply wanted to be as cautious as possible with its estimates.

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But state officials were aware that the estimates were off even as Scott repeated the numbers in Washington, according to emails obtained by Carol Gentry of Health News Florida, part of WUSF Media. The Health News Florida report noted that J. Eric Pridgeon, on the staff of the House Health Care Appropriations Subcommittee, questioned the study almost immediately. On Dec. 20, three days after the study was released, Pridgeon wrote state agency officials saying that the federal revenues for Medicaid expansion are part of the Affordable Care Act and cannot be omitted.

In response to criticism of the estimates, Scott spokesperson Melissa Sellers issued a statement defending them but noting, "Others have asked AHCA to use different assumptions to calculate different cost estimates. We look forward to reviewing those cost estimates as well."

The inflated estimates seem to be part of a pattern. Last summer, Scott claimed a Medicaid expansion would cost $1.9 billion a year. PolitiFact Florida looked into that number at the time and concluded that the estimate "appears to be wildly high." We rated his statement False.

Our ruling

There is no doubt that Medicaid represents a significant part of the state’s budget, and that any plan to expand the system -- no matter how much the federal government pays for -- could include additional costs to the state.

But rather than have a fact-based discussion about the state’s responsibilities when it comes to health care, it appears that Scott and his staff are making strange assumptions to make the estimates higher than they actually will be.

This is also a case where Scott cannot simply hide behind the fact that he is accurately citing a "study." His office directed the analysis, and it was notified that the assumptions were questionable.

Scott gets a pass on one thing: The cost to expand Medicaid is largely unknown. But using a study to say that the expansion of Medicaid would cost Florida taxpayers "over $26 billion" is False.

Our Sources

Health News Florida, "Legislative Analysts Told Scott His Medicaid Estimates Are Wrong (But He's Using Them Anyway)," Jan. 8, 2013

The Buzz, "Video: Gov. Scott, citing cost, remains skeptical of federal health care changes," Jan. 7, 2013

Email interview with Scott spokeswoman Melissa Sellers, Jan. 8, 2013

Agency for Health Care Administration, "Estimates Related to Federal Affordable Care Act," Dec. 17, 2012

Agency for Health Care Administration, "Overview of Federal Affordable Care Act," Jan. 4, 2012

PolitiFact, "Rick Scott says Medicaid expansion will cost state $1.9 billion," July 2, 2012

Emails between Eric Pridgeon, Amy Baker and Mike Anway, Dec. 17, 2012-Jan. 4, 2013

Office of Gov. Rick Scott, Statement on AHCA Projections, Jan. 8, 2013

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Rick Scott ignores flaws in state study, says Medicaid expansion will cost Florida $26 billion

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