Florida to sue over Obamacare Medicaid expansion

Florida Gov. Rick Scott announced Thursday that his administration will file a lawsuit against the federal government for threatening to withhold more than $1 billion in funding for hospitals if the state fails to expand Medicaid.

“It is appalling that President Obama would cut off federal health care dollars to Florida in an effort to force our state further into Obamacare,” Scott said, citing a 2012 Supreme Court ruling that said the federal government couldn’t put a “gun to the head” of states to force them to expand Medicaid under the health care law.


The Obama administration quickly accused Scott of misconstruing that court decision because the state is not being forced to do anything. And White House spokesman Josh Earnest blasted the governor for putting politics above people.

“It’s difficult to explain how somebody would think that their political situation and their political interest is somehow more important than the livelihoods of 800,000 people,” Earnest said.

Scott’s announcement is the latest salvo in a lengthy battle he has waged with the federal government over health care money — a legacy that stretches from his days as a hospital CEO to his 2010 campaign for governor. Florida was the lead state on the initial lawsuit that challenged the constitutionality of the Affordable Care Act.

In an extra twist, Scott’s latest move further inflamed intra-party tensions in the Republican-controlled Legislature, with the leader of the conservative House backing his action while the president of the moderate Senate denounced it as counterproductive and the Senate’s budget chief questioned whether Scott was pulling “a political stunt.”

Already at an impasse over the Medicaid fight, the two chambers are close to failing their state constitutional duty to balance Florida’s more than $76 billion budget by May 1. Their two versions are more than $4 billion apart.

“It’s tea party gone wild,” quipped Mark Pafford, who leads the House Democrats.

Adding to the high-stakes national politics of it all: The hospital program in question was established in 2005 under then-Gov. Jeb Bush, a likely presidential candidate who might now see one of his achievements — Medicaid reform — put at risk.

Asked about the situation during a New Hampshire stop, Bush told The Miami Herald that the leaders should find a “compromise.” But as for Medicaid expansion, Bush said “I don’t know.”

The surprise announcement by the governor follows weeks of escalating tensions between state and administration officials over Florida’s opposition to Medicaid expansion. Florida has insisted that the federal government continue to give about $1.3 billion for a safety-net hospital program called the Low-Income Pool, which will run out of funding on June 30. When state dollars are added, the program gets about $2.2 billion annually.

But federal officials — who warned last year that LIP would not continue in its present form after this summer — have said the program’s future is connected to the state’s decision on Medicaid expansion. The state has one of the highest uninsured rates in the nation, with about a quarter of its non-Medicare-eligible population lacking coverage.

In a statement Thursday, Florida Attorney General Pam Bondi said, “We led the lawsuit that stopped the federal government from forcing states to expand Medicaid, and we will not sit by while the Obama administration holds hostage LIP funding in an effort to force expansion here in Florida.”

State officials wouldn’t say exactly when or in what venue they would file their lawsuit. Scott is scheduled to appear on FOX News Thursday evening.

Negotiations between the state and federal officials about LIP funding have stretched on for a year, partly poisoned by an atmosphere of mistrust between the Florida Agency for Health Care Administration and the federal Centers for Medicare and Medicaid Services. Scott’s administration said it discussed multiple LIP models with federal officials, but it never officially submitted a plan amid the talks.

As Florida’s 60-day legislative session started in early March, the Senate grew increasingly concerned that the governor’s administration wasn’t moving fast enough. So late last month it dispatched two Republican members to meet with federal officials in Washington and show its own LIP plan, which linked the program to Medicaid expansion.

Scott, angered by what he saw as interference, said the two undercut negotiations. But the state agency then adopted the tenets of the Senate plan — even as Scott continued to insist that the issues of LIP and Medicaid expansion were separate. The House also remains adamantly opposed to expansion.

On Tuesday, CMS made its position clear.

“We believe that the future of the LIP, sufficient provider rates, and Medicaid expansion are linked in considering a solution for Florida’s low-income citizens, safety net providers, and taxpayers,” CMS Acting Director Vikki Wachino wrote to Florida’s deputy Medicaid director, Justin Senior.

Within hours, Scott and his advisers began seriously discussing the lawsuit he announced Thursday. They referenced the 2012 Supreme Court ruling that upheld Obamacare’s constitutionality but made Medicaid expansion optional. In the majority opinion, Chief Justice John Roberts said Obamacare’s proposal to deny all Medicaid funds to a state if it refused to expand Medicaid further was unlawful coercion that amounted to “economic dragooning.”

“The Supreme Court has already ruled in NFIB v. Sebelius that the president cannot force Medicaid expansion on states,” Scott said in his public statement. “In fact, the court ruled that the president could not use ‘gun to the head’ approaches in pushing for Medicaid expansion.”

CMS countered Thursday afternoon that the state is not being forced to do anything. The LIP program is optional and “has long been scheduled to expire June 30,” agency spokesman Aaron Albright said in a statement. Nor is CMS threatening to withhold the billions in federal dollars that help to fund Medicaid in Florida, Albright added.

“Florida, like all states, is free to implement Medicaid expansion or not,” he wrote. “Florida is requesting an additional optional extension, which raises a different question: whether it promotes the objectives of the Medicaid statute to use demonstration authority when the state has statutory options that would better serve the low-income population.”

Florida’s Republican Senate president, Andy Gardiner, sides with CMS. “The federal government has no obligation to provide LIP funding, or to work within our timeframe,” Gardiner said in a written statement.

“While we respect Gov. Scott’s authority to protect the state’s interests in the way he sees fit, we have a constitutional responsibility to pass a balanced budget by a specific deadline,” Gardiner said. “From where I sit, it is difficult to understand how suing CMS on Day 45 of a 60-day session regarding an issue the state has been aware of for the last 12 months will yield a timely resolution to the critical health care challenges facing our state.”

Others also question whether a lawsuit would have merit. Deborah Bachrach, a former New York Medicaid Director and at attorney at Manatt, Phelps & Phillips, says she doesn’t think the situation in Florida is coercion. The arrangement through which the state receives LIP is discretionary, and there’s no obligation for the Department of Health and Human Services to renew it.

“Whatever the practical ramifications are, legally, I think the [HHS] secretary has the discretion to change the conditions under which the pool is granted or reduce the value of the pool,” Bachrach said. Federal officials have very clearly stated that they believe providing coverage to individuals is a better mechanism than providing money directly to hospitals, she added.

But House Speaker Steve Crisafulli endorses Scott’s maneuver.

“The governor’s office reached out to our office just moments before the announcement was made. I believe the governor is doing what is best for the state, and he has the support of the House,” Crisafulli said in a written statement.

Scott described the fight as an issue of fairness. Other states that have expanded their Medicaid programs still receive supplemental federal funding to help pay for uncompensated care because Medicaid expansion doesn’t completely eliminate those costs, the governor argues.

“President Obama has decided that the state must take on a larger Medicaid program, forcing our taxpayers to pay even more to government, before they get their own federal tax dollars back,” Scott said. “This is outrageous and specifically what the Supreme Court warned against.”

Scott’s decision to tangle with the federal government over health care stretches back decades to his days leading the Columbia/HCA hospital chain. He became a leading critic of what was dubbed “Hillarycare” during President Bill Clinton’s first term in office in 1993. Four years later, the federal government accused Columbia/HCA of rampant fraud — political retribution, Scott defenders said. Scott was forced to leave the company, which paid a record $1.7 billion fraud fine.

After Obama’s sweeping victory in 2008, as Democrats pushed again for comprehensive health care legislation, Scott rose to fight the proposal with a group he funded. It was called Conservatives for Patients Rights, or CPR, and became the political seed of his 2010 gubernatorial campaign.

Scott abruptly reversed his opposition to expanding Medicaid under Obamacare before his election in 2014. But he didn’t talk about it much, and the conservative House opposed the plan anyway. Earlier this month, Scott reversed course again and said he opposed Medicaid expansion — this time because of the federal government’s LIP negotiations, which he said weren’t being conducted in good faith.

“How can you trust them?” Scott asked POLITICO rhetorically.