Medicaid expansion costs: Not as much as Scott thought

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As Governor Rick Scott and lawmakers are tangled in a debate about whether to expand Medicaid under the federal Affordable Care Act, new estimates show that the expansion and other parts of the law would cost the state about $5.2 billion over 10 years, reports Jim Saunders of the News Service of Florida.

State analysts updated cost estimates Thursday and are expected to issue a report Friday. In all, they found that expanding Medicaid eligibility would cost the state roughly $3.5 billion during the next decade — with those costs starting to hit during the 2016-17 fiscal year and steadily climbing after that.

The state’s share, however, would only be a fraction of the $55 billion overall expansion cost, with the federal government paying the rest. Under the law better known as Obamacare, Washington would pay 100 percent of the expansion costs during the first three years and gradually reduce that share to 90 percent in 2020.

It remains unclear whether the state will agree to the expansion. While Scott has endorsed the idea for at least three years, it is opposed by House Speaker Will Weatherford, R-Wesley Chapel, and was voted down this week by a House select committee.

Scott early this year drew heavy criticism for saying that carrying out Obamacare could cost the state $26 billion over 10 years. The state Agency for Health Care Administration later issued a far-lower estimate that indicated the costs would be a minimum of $3 billion over that period — an estimate that is more line with the numbers updated Thursday.

The Medicaid expansion would allow people with incomes up to 138 percent of the federal poverty level to enroll in the program. Florida currently has varying income thresholds for Medicaid enrollment, but one of the biggest effects of the expansion would be to allow childless adults to enroll. That group is largely shut out of the program now.

Amy Baker, coordinator of the Legislature’s Office of Economic & Demographic Research, said the estimated $3.5 billion cost also includes children whose family incomes are up to 138 percent of the federal poverty level and who are enrolled in the state’s Florida Healthy Kids subsidized insurance program. State officials said they think the Affordable Care Act will require those children to shift into Medicaid, regardless of whether state lawmakers approve the expansion.

Though the expansion controversy has drawn most of the attention, Obamacare will create other costs for the state. The revised numbers Thursday put the total at $5.2 billion, but that number also does not appear to include expected increased costs to the state-employee health insurance program.

As an example of the other types of costs included in the estimate, the Affordable Care Act places a tax on health-insurance plans. With hundreds of thousands of Medicaid beneficiaries enrolled in HMOs, the state expects those plans to pass through the taxes in their rates. The new estimates show the passed-through taxes would cost the state an estimated $1.3 billion over 10 years.

Regardless of whether lawmakers decide to expand Medicaid eligibility, the federal law will have relatively little impact on the state budget during the upcoming 2013-14 fiscal year. The updated numbers Thursday showed $22.55 million in costs, with most of that stemming from the insurance taxes.

Peter Schorsch is the President of Extensive Enterprises and is the publisher of some of Florida’s most influential new media websites, including,,, and Sunburn, the morning read of what’s hot in Florida politics. SaintPetersBlog has for three years running been ranked by the Washington Post as the best state-based blog in Florida. In addition to his publishing efforts, Peter is a political consultant to several of the state’s largest governmental affairs and public relations firms. Peter lives in St. Petersburg with his wife, Michelle, and their daughter, Ella.