The Budget Train Wreck: The Coercive Power of Money

The Budget Train Wreck: The Coercive Power of Money

Yesterday, I started writing about the budget impasse in Tallahassee and its roots in the conflict over health care funding related to uninsured residents. Yesterday’s focus was Governor Scott’s claim that the federal Centers for Medicare and Medicaid Services (CMS) was acting inappropriately with regard to the Low-Income Pool (LIP), that their tactics were inconsistent with good practice in the private, as well as the public, sector. Today’s focus is on the lawsuit Governor Scott announced yesterday.

The lawsuit (which hasn’t been filed yet) apparently will allege that CMS is attempting to coerce Florida into expanding Medicaid, in direct conflict with the decision in the case of National Federation of Independent Business v. Sebelius (2012).  In that decision,the U.S. Supreme Court determined that the Medicaid expansion mandate contained in the Patient Protection and Affordable Care Act (ACA) was unconstitutionally coercive. Governor Scott alleges that CMS’s efforts to link continued funding of the Low-Income Pool to the expansion of Medicaid eligibility is similarly and unconstitutionally coercive.

The fact is that CMS is refusing to continue funding for the Low-Income Pool without some sort of action by Florida to expand the coverage of Medicaid. The question is, is such a refusal by CMS unconstitutional?

I’m not a lawyer, and I don’t advise the Governor on legal matters. I am pretty well-versed in reading Supreme Court decisions, which doesn’t make my interpretation correct, but does help me work my way through the legal language.

I’ve read the relevant portion of the majority opinion in National Federation . . . and I must confess that it seems pretty clear that it isn’t relevant to what CMS is doing with the Low-Income Pool and the expansion of Medicaid in Florida. Here’s why:

What the U.S. Supreme Court found objectionable in the provision for Medicaid expansion under the ACA was that, if a state did not agree to expand Medicaid coverage, the Federal Government would take away existing Medicaid funding. Federal support for Medicaid was an ongoing program with no fixed term or sunset provision. Now, suddenly, that funding could be terminated if states didn’t agree to major changes in Medicaid eligibility. This penalty for lack of cooperation amounted to “over 10 percent of a State’s overall budget.”

The important point here is that the funding in question was the existing federal appropriation to each state to support the delivery of Medicaid, an ongoing program involving both federal and state funds. Furthermore, the penalty was imposed on states who were willing to continue to do their part for Medicaid as it had existed, to continue what was an ongoing program, but were unwilling to buy into a transformation of that program into something the Court viewed as “a shift in kind, not merely degree.”

In the current situation, CMS, on behalf of Uncle Sam, is not threatening to withhold Medicaid funding. Not at all. Florida would continue to receive Medicaid funding. Indeed, Florida will continue to be allowed to serve the original Medicaid-eligible population in accordance with Florida’s unique managed-care approach, something we don’t have a right to under the provisions of federal law, but that CMS has approved and has reauthorized repeatedly for the last ten years (most recently in 2014). None of that is affected by the current dispute.

What is affected is a special program negotiated between Florida and CMS related to how we deliver services to the poor, a program called the Low-Income Pool. Like the Medicaid waiver itself, CMS agreed to provide funding for the Low-Income Pool for a limited period of time. Each time the term of that agreement has been reached, it was understood that the State of Florida and CMS would have to enter into negotiations if the waiver was to be continued.

It also was understood that, at the end of the term, CMS could refuse to extend the waiver provisions (including the Low-Income Pool) and could require Florida to adhere to existing federal regulations.

The federal government never committed to make the Low-Income Pool an ongoing program. In fact, in the most recent renewal of Florida’s Medicaid waiver, CMS specifically separated the Low-Income Pool and give it only one more year of life. That was in 2014.

What was coercive about the Medicaid expansion mandate in the ACA was that failure to comply meant funds states legitimately had counted on and had designed their programs to draw down no longer would be available . . . with a massive effect on state budgets going forward.

The State of Florida had no reason to believe that LIP funding would be available after this year. We certainly could not claim a right to it. To be told that a limited time offer has expired is not coercion. It is, in fact, keeping faith with one’s commitments.

It’s Florida, not CMS, that is not keeping faith . . . not with our federal partner, and not with our citizens.