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Other Views from Those in the Know
Greg Mellowe
Director of health research an analysis for FCFEP.
Premium Plan Will Pull Plug on Medically Needy

As part of its overall Medicaid “reform” plans, Florida is seeking federal approval for changes that could end benefits from a program that has helped hundreds of thousands of Floridians with catastrophic medical expenses for many years.

At stake is the future of the Medically Needy component of the Medicaid program, which provides short-term coverage to those with too much income for regular Medicaid but who have medical expenses that they cannot possibly afford to pay. 

The state recently requested federal permission to require, for the first time, that all Medically Needy participants enroll in a managed care plan and pay monthly premiums, purportedly to ensure their access to continuous coverage.  However, failure to pay those premiums would end their eligibility for Medicaid altogether.  The problem is that virtually no Medically Needy participants would be able to afford the premiums, which could absorb up to 90 percent of their household income. 

This is not a marginal program providing slight assistance to a few Floridians who could manage without the help.  More than 40,000 Floridians each month were in the program in 2010-2011.  More than 546,000 Floridians were covered under the program during at least one month between July 2008 and June 2011.  The vast majority of the eligible are low-income; in fact, well more than three-fourths of families with children and more than half of the elderly and disabled who rely on the program in any given month have household incomes below the federal poverty level. 

Because their incomes exceed Florida’s very low Medicaid eligibility threshold, however, Medically Needy participants do not have regular, ongoing Medicaid coverage.  Rather, they are only covered by Medicaid on a short-term basis during months in which they meet what is known as their “Share of Cost,” which means that they incur medical expenses that, if paid directly by the participant, would reduce his or her family income to a destitution-level 19 percent of the poverty level.   

Under the new proposals, participants would meet their Share of Cost requirement for their first month of eligibility in precisely the same manner as with the current Medically Needy program.  Beginning the first day of the following month, however, he or she would be enrolled in a managed care plan for six months, provided the participant pays the monthly premiums.  If the full premium amount is not paid after three months, the participant would be disenrolled from the plan and lose Medicaid eligibility altogether, regardless of medical condition or hardship. 

While the actual distribution of premiums to be paid among all Medically Needy participants is difficult to estimate because of variables such as household income, it is clear from our analysis that the requirement to pay premiums would impose an unbearable burden on most participants, already poor to begin with.

The proposed changes are just one component of the overall Statewide Medicaid Managed Care (SMMC) initiative approved by the Florida Legislature in 2011.  Under that legislation, virtually all Florida Medicaid recipients would be required to enroll in capitated, mostly for-profit managed care plans.  However, federal Center for Medicaid and Medicare Services (CMS) must first sign off on Florida’s plan, most of which was submitted last August. 

CMS has already rejected two other parts of the initiative that were considered punitive measures that could not be granted under federal law, including Florida’s request to charge most regular Medicaid recipients $10 monthly premiums.  This far more extreme Medically Needy proposal similarly appears to be in direct conflict with federal law and in jeopardy of rejection by CMS as well.

In short, the proposed premium requirements would prove unaffordable to virtually all Medically Needy participants.  Far from a necessary “reform”, the proposal is a step backwards that poses a significant threat to the health and well-being of hundreds of thousands of Floridians in the future.

Greg Mellowe is director of health research and analysis for the Florida Center for Fiscal and Economic Policy. 

by Dr. Radut.