For the first time, HCFA will allow a state to use federal Medicaid money to subsidize private health insurance for the working poor.
HCFA granted conditional approval to the state of Florida for its plan to place 1.4 million Medicaid recipients into lower-cost managed-care programs. Savings generated, which have been estimated at $2.6 billion over five years, would go toward helping subsidize health insurance for about 1.1 million uninsured working Floridians.
HCFA's approval, however, is contingent on legislative approval of Gov. Lawton Chiles' "Florida Health Security" program. The plan calls for offering state-subsidized insurance to individuals earning less than $18,400 a year and a family of four with income of less than $37,000, which amount to 250% of the federal poverty level.
Earlier this year, Republicans in the Florida Legislature twice blocked Mr. Chiles' plan. Besides questioning the governor's assertion that the subsidy program won't increase the total state budget, some Republicans said they couldn't vote for the bill before the federal government gave the green light.
Mr. Chiles has said he will call a special session after the November elections to take up the bill. But Jeb Bush, the Republican candidate for governor, has called Mr. Chiles' plan "the largest welfare expansion in Florida's history."
Republicans, in an effort to limit the scope of the program, had offered an alternative plan earlier this year that would have offered subsidies to residents who earned less than 150% of the federal poverty level, or about $22,200 for a family of four. As a condition of its waiver, HCFA requires that 70% of the plan's enrollees be those with incomes below the 150% level.
The private insurance would be purchased through the state's 11 community health purchasing alliances, or "Chippas." The chippas, which began operation earlier this year, help market low-cost health insurance to small businesses with fewer than 50 employees.