State Politics

Budget cuts could mean big profits for HMOs

This is the year of big talk about healthcare. And potentially bigger profits for HMOs.

As Medicaid swells in cost and number of recipients, some Republican legislative leaders are increasingly interested in putting more of the program’s patients into HMOs, giving the private companies more control over the state-federal program for the poor.

“We know managed care works and we know it saves money,” says Sen. Don Gaetz, a Niceville Republican who chairs the Senate health regulation committee. “And really, that’s what we need to focus on — cost and saving money.”

In the past five years, the number of Floridians on Medicaid has grown 28 percent to about 2.8 million people. Costs have grown even more — about 35 percent — and the program now weighs in at about $19 billion in the current budget year. The numbers could become even bigger under congressional Democrats’ healthcare reform proposals, which boost the number of people who qualify for Medicaid. The proposals would increase Medicaid’s minimum-income eligibility threshold by about 33 percent so that a family of four earning about $29,326 a year or a single person earning $14,404 a year could qualify for Medicaid.

But while Florida legislators frequently fret about the growth in cost, they rarely note that the state’s share of the program has grown at a disproportionately slower rate than the federal government’s portion.

Either way, the total tax money spent to pay for the program is increasing. And the increases in an entitlement program for poor people are bound to be big in Florida because more people are getting poorer here. Florida is one of the nation’s leading states in job losses and home foreclosures.

The HMO industry says it can help as the rolls grow. HMOs say they can cover more people for less money in Medicaid by coordinating care and thereby reducing waste. Also, since they’re financially on the hook for over-payments or questionable prescriptions,

HMOs say they do a better job in cracking down on patient and doctor fraud.

But critics say the industry skimps on health care to maximize profits. And they’re not sure about the promises of big savings. Rich notes that a recent consultant report for the Legislature found that the state could save about $118 million by removing HMOs as an option in the state-employee health plan — a finding that, she says, might undercut the notion of big savings from the industry when it comes to the Medicaid program.

The chairman of the House Health & Family Services Policy Council, Tampa Republican Ed Homan, is pushing his own Medicaid savings plan that seeks to downplay the influence of managed-care companies. Called a “medical home,” the proposal would make doctors’ offices one-stop healthcare shops where doctors, rather than HMOs, would coordinate care.

Homan, a doctor, acknowledged he has encountered some resistance to the plan in the Senate, “but I’m not sure why.” The Florida Medical Association also supports the medical-home concept.