The Obama administration offered Thursday to extend Florida's hospital funds for another two years, but only at about half the amount the state received last year -- a deal that might help fill a $1 billion state budget hole and resolve a legislative stalemate.
The proposal is still subject to a formal review but federal officials said they wanted to work with the state in good faith, recognizing that the Legislature needs to pass a budget by June 30 to avoid a state government shutdown.
The proposal puts states with large numbers of uninsured residents like Florida and Texas -- which have refused to expand Medicaid -- on notice that the Obama administration will not use "the funding to pay for costs that would be covered in Medicaid expansion," according to a letter from federal health officials.
But they also acknowledged losing those low-income pool funds may be difficult for the state. Florida's current hospital funds are $2.1 billion dollars, with the federal government paying 60 percent and Florida putting up 40 percent. The administration's preliminary offer drops that to $1 billion for the 2015-2016 fiscal year. Obama administration officials said in the letter they believe the accurate amount should be $600 million, and they're cutting the state to that level the following year.
The funds, which are part of a federal program that covers the hospital bills of uninsured and Medicaid patients, were supposed to end this year as President Barack Obama's health care program grew. Patients covered by the low-income pool were supposed to be covered by Medicaid, but the Florida House and Scott have balked at expanding it.
The bitter standoff between the Republican governor and the Obama administration tore apart the state legislative session, with the House abruptly adjourning three days early last month. Scott sued the Obama administration, comparing federal officials to the TV mobster show "The Sopranos" and accusing them of withholding the hospital funds because the state wouldn't expand Medicaid.
Florida lawmakers will have to decide when they return for a special session on June 1st whether they want to dip into the state budget to fill the gap. If not, state hospitals will get less money in the coming year.
Scott pressed for the extension for months, even visiting Washington twice and blaming the Obama administration for ruining his budget and ignoring his timeline even though he's known for more than a year that the funds were ending. He waited until mid-April to submit a proposal, although the months-long required public comment period made it impossible to get an answer before the Legislature adjourned last month.
The Obama administration and hospitals want the governor to expand Medicaid to more than 800,000 low-income Floridians.
But Scott and Republican House leaders refuse to accept any money tied to so-called Obamacare -- including Medicaid expansion. They even snubbed a Senate proposal that would eventually take billions of federal dollars and allow the Medicaid expansion recipients to buy private health insurance -- a solution that Scott has fought for in the past.
The governor said Thursday he was still reviewing the letter and declined to say whether he would drop his lawsuit or if he would veto a Medicaid expansion bill.
"It's good that it's happening right now before special session. I'm going to work with the House and the Senate to make sure all the citizens get quality health care but at a price they can afford it," the governor said.
Senate President Andy Gardiner called for a long term solution that uses federal funds instead of relying of state dollars to fill holes.
"I do agree that coverage, rather than back-end supplemental payments, is a better investment for our taxpayers," he said in a written statement.
The House and Senate recently announced they would discuss Medicaid expansion during the special session, snubbing the governor's call to focus only on the budget. But the announcement from the federal government bolsters the argument of House Republicans who maintained that the state would continue to receive a decent chunk of the hospital money without having to expand Medicaid.
Eight other states that receive the federal hospital funds are closely watching the feud between Florida's governor and the Obama administration. Federal health officials have told those states they will apply guidelines similar to those used in Florida.
Texas and Kansas, both of which oppose Medicaid expansion and receive the federal hospital funds, filed briefs supporting Scott's lawsuit against the Obama administration.