Medicaid Disenrollments Exceed Expectations, But New Challenges Emerge for State Health Care Budget
As Florida navigates the aftermath of the pandemic, a surprising dip in Medicaid enrollments has helped ease some of the financial pressure on the state’s health care system. But, with new health care expenses, particularly in therapies for children with autism, the relief might be short-lived.
Medicaid disenrollment has been a significant part of Florida’s post-pandemic recovery, with more than 478,000 people removed from the program. This reduction, which results from the end of federal pandemic-related protections, has exceeded predictions by state officials. For many, the safety-net program that supports low-income individuals and families is a lifeline, and the changes have sparked concerns among advocates.
While fewer enrollees mean less strain on the budget, the savings may be undermined by the increasing costs associated with specialized health care services, particularly Applied Behavior Analysis (ABA) therapy.
Medicaid Disenrollment: More Than Expected
The pandemic era provided Medicaid recipients in Florida with extended protections. States were prohibited from disenrolling people during the national emergency, which meant that many individuals and families continued to receive Medicaid benefits despite changes in their eligibility status. However, that all changed in 2023 as federal protections were lifted, setting the stage for mass disenrollments.
According to Matt Cooper, the assistant secretary for health care data at the Florida Agency for Health Care Administration, about 478,940 fewer people are currently enrolled in Medicaid compared to prior projections. This number reflects a significant reduction in the Medicaid caseload, leading to potential savings for the state. Florida’s Medicaid program is a major component of its nearly $119 billion budget, funded through a mix of state and federal dollars.
Despite the overall decrease in enrollment, the process of evaluating eligibility has not been without controversy. Advocates for low-income and vulnerable populations argue that the state’s reevaluation methods have been problematic, leaving many without access to essential health services.
The state’s Department of Children and Families is responsible for qualifying individuals for Medicaid, but the federal government plays a key role in determining who qualifies for the Social Security Income (SSI) program. SSI recipients, who are elderly, blind, or disabled, automatically qualify for Florida Medicaid.
The Impact of Medicaid’s Decline on Health Care Costs
While the lower-than-expected Medicaid enrollment is a financial relief, it has also created a somewhat paradoxical situation for state lawmakers. Originally, the Legislature appropriated funds anticipating a much larger Medicaid caseload. With the unexpected drop in numbers, more funds than necessary were allocated for health care services.
However, this financial breathing room may not last long due to rising costs associated with specific therapies, such as Applied Behavior Analysis (ABA), a treatment commonly used for children with autism.
The Rising Costs of ABA Therapy
One of the key cost concerns in Florida’s Medicaid program is the growing demand for ABA therapy, which is designed to help children with autism develop important life skills. ABA therapy is a treatment based on the principles of behavior science and focuses on encouraging positive behaviors while reducing harmful ones.
For years, Florida has provided ABA therapy services on a fee-for-service basis rather than incorporating it into Medicaid managed care plans. This means that Medicaid pays for each service as it is delivered rather than as part of a larger managed care package.
Initially, the state’s budget for ABA services was set at $1.52 billion. However, as demand for these services has increased and costs have risen, state economists are now predicting that the actual cost will be closer to $1.63 billion, just for the period between July 2024 and February 2025. This cost overrun adds a layer of complexity to the state’s financial planning, particularly as Florida braces for changes in its Medicaid managed care contracts.
What’s Next for Medicaid Managed Care Contracts?
In February 2025, Florida plans to roll out new statewide Medicaid managed care contracts. These contracts will require that Medicaid managed care plans provide ABA services to eligible recipients, marking a significant shift in how the state handles these therapies. The goal is to streamline the system, but experts worry that this could drive up overall costs.
Medicaid managed care contracts are intended to control costs by providing a set budget for health care providers to work within. However, with ABA therapy’s rising expenses, state officials are left to wonder whether these new contracts will be enough to balance the budget without sacrificing service quality or access to care.
The Bigger Picture: Striking a Balance Between Cost Savings and Care
The situation in Florida’s Medicaid program presents an intriguing case for balancing the twin priorities of managing state health care costs while ensuring that vulnerable populations still have access to the services they need.
In the coming months, it will be critical for state officials to keep an eye on Medicaid enrollment trends and any potential financial shortfalls that could arise as new programs, like the ABA therapy inclusion, come into effect.
While the temporary drop in Medicaid caseloads has provided the state with some financial relief, it remains to be seen whether the savings will be enough to offset the increasing costs associated with specialized care. Florida is clearly at a crossroads, and it will need to carefully consider how to manage its health care dollars moving forward.
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