Florida’s Financial Health Care Follies, and a Problem with a Part-Time Legislature

The one constitutional responsibility of Florida’s legislature is to pass a budget—something Florida’s solidly Republican House and Senate could not do by the end of their regular legislative session. The big issue that divided them was how to deal with the Affordable Care Act’s mandates.

Here’s the issue. Florida has been receiving about $1.3 billion a year in a Low Income Pool (LIP) grant from the federal government to help offset the costs hospitals incur from uninsured patients. The Obama administration is replacing LIP funding with Medicaid grants to states that expanded their Medicaid programs under the Affordable Care Act. Florida has not expanded its Medicaid program, so the Obama administration says it will not get the Medicaid money nor the LIP funding.

The state Senate wants to expand Medicaid and get the federal money. The House does not want the Medicaid expansion. There’s the impasse. Meanwhile, Governor Rick Scott is suing the federal government to get the LIP money restored, claiming that the federal government is using the threat of funding cuts in order to try to force the state to expand a program it does not want to expand. The federal government is telling Floridians, who pay federal taxes just like everyone else, that it will send their tax dollars to other states unless they bow to this federal pressure to expand Medicaid.

In 1990 Medicaid made up less than 10% of Florida’s state government budget. Now it makes up more than 30%. It seems reasonable for Florida’s legislature to decide they won’t expand the program further, and it seems unreasonable for the federal government to coerce any state into expanding its expenditures on any program. The federal government passed the Affordable Care Act. They should not be requiring states to administer and pay for it. I’m siding with the Florida House and the governor on this one.

There is another interesting wrinkle in this division between the Florida House and the Florida Senate. Florida has a “part-time” legislature, so most legislators have other jobs. The president of the Florida Senate, Andy Gardiner, is vice president of Orlando Health, a network of hospitals that receives state funding. His annual pay of nearly $200,000 a year includes incentives based partly on the financial performance of the hospitals in his network. Gardiner has a direct personal incentive to push for Medicaid expansion, even as the House and governor oppose it.

Conflicts of interest show up often in every legislature, but this specific example might point toward a problem with “part-time” legislatures, which almost require legislators to have outside financial interests.

Florida’s Constitution requires a budget to be passed by July 1, and with the regular legislative session now over, I expect a special session to be called and a budget passed. Unlike market transactions, where people exchange for their mutual benefit, politics is a game of winners and losers, so however this plays out, one side will win and the other will lose.

This isn’t Republicans against Democrats. Both the House and Senate are solidly Republican. This is just an example of how the political process divides people and creates conflict, even among people who mostly agree with each other.

Randall G. Holcombe is a Research Fellow at the Independent Institute, the DeVoe Moore Professor of Economics at Florida State University, and author of the Independent Institute book Liberty in Peril: Democracy and Power in American History.
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