Economists agree: Florida’s Medicaid program headed into the red this year

TALLAHASSEE, FLA. 11/30/21-Tom Wallace, Medicaid director for the Florida Agency for Health Care Administration, speaks during the House Health Care Appropriations Subcommittee, Tuesday at the Capitol in Tallahassee. COLIN HACKLEY PHOTO

Florida’s safety net health care program is expected to swing into the red during the current budget year, a turnabout from the last few years where extra federal money tied to the COVID-19 public health emergency resulted in surpluses that the Gov. Ron DeSantis administration and the Republican Legislature used to fund other priorities.

State economists met with the Agency for Health Care Administration (AHCA) to draw up new estimates on how much the state will need to spend on Medicaid during the fiscal year that began on July 1, as well as for the next several years.

While economists have not released final numbers, Medicaid Deputy Secretary for Health Care Finance and Data Tom Wallace projected a Medicaid budget deficit of nearly $600 million by June 30, 2024, of which $227 million is the state’s portion of the tab.

Wallace said to keep the program operating at current levels, Medicaid would require $934 million for the Fiscal Year (FY) 2024-25 budget that begins July 1, 2024. Lawmakers will prepare that budget when they meet in Regular Session next year.

Rep. Sam Garrison, Chair of the House health care spending panel, said the updated projections are a “possible budget challenge.”

“But thankfully we have long established a culture of fiscal responsibility and are in a position to handle it,” Garrison told Florida Politics Tuesday morning.

The deficit comes as Florida returns its Medicaid program to pre-pandemic operations, requiring beneficiaries to once again submit financial information to continue to qualify for the program (which they were banned from doing during the public health emergency). But the state initially overestimated how many people would be dropping from the rolls over the next two years.

The state also is losing billions of federal dollars that Congress directed states during the pandemic to help fund Medicaid programs, which were burgeoning with new members as the economy soured and more people qualified.

Congress increased the federal Medicaid matching rate by 6.2% during the pandemic, which lessened the amount of state tax dollars that needed to be appropriated to cover the programs’ costs. In Florida, the DeSantis administration and the Republican-led Legislature redirected the surpluses back into the state’s general revenue fund and used it for a variety of other priorities.

But the end of the public health emergency meant elimination of the 6.2% rate increase.

The loss of federal funds comes as Florida once again requires beneficiaries to verify their financial information for continued enrollment in the Florida Medicaid program.

The DeSantis administration had anticipated in the spring that about 900,000 people would be disenrolled from the Medicaid program by the end of June as it began its Medicaid unwinding efforts.

But the Social Services Estimating Conference (SSEC) agreed last month that there would be about 302,000 more people in the Medicaid program in the current fiscal year than what the Legislature had budgeted for in the FY 2023-24 budget.

Moreover, the SSEC — composed of economists from AHCA, the Governor’s Office, the Florida House, the Florida Senate and the Office of Economic and Demographic Research — agreed to increase its previously projected Medicaid enrollment for FY 2024-25 by 132,000 people.

State economists usually meet in the summer with legislative budget staff to draw up the numbers that will be used to draw up a three-year, long-range outlook that will be presented to the Legislative Budget Commission in September.