Florida budget attempts to close $417 million Medicaid deficit

The Florida Legislative Budget Commission adopted several amendments allocating funds for the Agency for Healthcare Administration (AHCA), the Department of Health, and other agencies on Friday. The Commission also reviewed a long-range financial outlook for Florida from fiscal years 2021-23, which Commission Chair Rep. Jay Trumbull (R-Panama City) described as “very positive,” despite the projected Medicaid deficit.

 

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New budget forecasts predict the state will have $36.9 billion in general revenue in FY 2021-22, a 4% increase from the previous fiscal year. In FY 2022-23, revenue will increase to $38.3 billion, a 3.2% increase. Chair Trumbull attributed the favorable increase to two factors.

“First, our decision to open up our economy significantly improved the revenue picture. In addition, the legislature’s history of prudent budgeting has kept the overall size of our recurring revenue in check. Even though this outlook shows positive news, I do want to caution folks that these sizable balances depend on the legislature continuing to show restraint in creating or expanding current programs.”

 

Image: Florida Legislative Budget Commission

 

The financial outlook did not account for new or expanded programs, or potential risk spending, such as hurricane response or the pandemic. The state currently relies less on general funding  due to additional federal coverage from the Federal Emergency Management Agency (FEMA) and increased FMAP percentages for Medicaid reimbursement. 

The increased FMAP percentages are set to expire in December 2021, and the loss of those funds will be a “key driver” of the upcoming budget, according to Eric Miller, policy chief of the House Local, Federal, and Veterans Affairs Subcommittee. 

AHCA assistant deputy secretary Tom Wallace informed the commission that the total Medicaid-related expenditures for FY 2021-22 are projected at $34.9 billion, with a $417 million deficit, according to state economists. 

The commission reviewed a handful of budget amendments concerning AHCA, including item B2022-0117, which will specifically realign funds to address the $417 deficit. Wallace said:  

“We’ll take some of the surplus from the line items we have, and move it to the line items that are projecting a deficit and to cover that deficit.”

This amendment would reallocate funds to AHCA programs such as the Medical Care Trust Fund and Refugee Assistance Trust Fund. It would also allocate $265.9 million into “unbudgeted reserve:” $223 from the General Revenue Fund, $18.6 million from the Health Care Trust Fund, $11.5 million from the Grants and Donations Trust Fund, and $12.4 million from the Medical Care Trust fund.

Reports have shown an increasing number of Floridians are enrolling for coverage throughout the pandemic. The financial outlook projected five million Medicaid beneficiaries in FY 2021-22 (one million more than the previous peak). 

After answering clarifying questions from legislators, the commission adopted all amendments without opposition. See the complete list of budget amendments here