OUR VIEW: Obama's Medicaid extortion

So what: Florida House Speaker Steve Crisafulli adjourned the House of Representatives three days before the officially scheduled end of the 2015 legislative session. And he did it without the House and Senate completing the one job they are required to do — adopt a budget before July 1, the start of the new fiscal year.

For those in the vortex of the capital, this was a big deal, even ruled a violation of the Florida Constitution. But for millions of Floridians who pay attention tangentially to Tallahassee, there is little reason to lament that lawmakers were unable to pass dozens of bills. Cynical as it may sound, taxpayers are better off that way. The less lawmakers do, the less they infringe on your freedom.

But here’s what this whole “crisis” comes down to: how power corrupts and turns into Machiavellian vindictiveness — all at the expense of the innocent.

It’s Barack Obama, his federal Mafiosi and Congress’ Affordable Care Act, aka Obamacare, versus Florida Gov. Rick Scott and the Florida House.

And at the center of this power corruption? Medicaid and Florida’s 10-year-old Low Income Program.

They are the chess pieces that help illustrate one of the worst parts of federalism: legalized extortion. It’s when a higher level of government takes money from taxpayers and then redistributes the money to a lower government — as long as the lower government follows the higher government’s dictates.

In the private sector, we call that racketeering, extortion and the mob. And if you challenge the mob, watch out. You pay a dear price.

It’s easy to fall into the “MEGO” mode (my eyes glaze over) when you try to understand the political, Machiavellian maneuvering that has transpired the past six months. But the story behind the outcome — which was the collapse of the legislative session — demonstrates the levels of vindictiveness that sometimes consume politicians who are so antithetical to each other. That would be President Obama and Gov. Scott.

It starts with Jeb Bush

You have to start at the beginning, which goes back to 2005. That’s when Florida Gov. Jeb Bush visited the George W. Bush administration to seek a waiver from federal Medicaid requirements. Gov. Bush was at the forefront of experimenting and innovating — what the Founders envisioned states should do. Gov. Bush wanted to convert Medicaid from a fee-for-service program to managed care to control its spiraling costs.

The G.W. Bush administration granted the waiver, creating “LIP,” the Low Income Program. This allowed federal money to be sent directly to a select group of Florida hospitals and county health departments to reimburse them for care given to people who could not afford to pay, “uncompensated care.”

Each year, the program distributed $1 billion in state and mostly federal money. It worked. The feds renewed the waiver for nine years, and the amount of money involved grew to $2 billion.

Not everyone liked LIP, of course. All government redistribution has winners and losers. In this case, hospitals that didn’t receive LIP money thought the system should be changed so that the money more closely followed the patients and not just a select group of hospitals.

Obama administration officials, after the adoption of Obamacare, didn’t like LIP either. The leaders of the Centers for Medicare and Medicaid Services (CMS) began to let Florida officials know they wanted changes. It didn’t take a genius to recognize what CMS officials ultimately wanted — Florida to expand Medicaid under Obamacare.

The Mafia had spoken

The Obama administration’s opposition to LIP came to a head in early 2014, when the CMS feds and Florida’s Agency for Healthcare Administration (ACHA) renewed the LIP waiver. The feds told the state that was it — the last time CMS would grant the waiver, and in 2015, the program would need to change.

The Mafia had spoken: Do it, or the $2 billion would be gone. But exactly what the state was to change CMS did not say.

Elizabeth Dudek, secretary of ACHA, told the Senate Ethics Committee last month: “When we were told last year there would be only a one-year extension to the current program, we began discussions with CMS. We contracted for an independent study, and that would provide a beginning for our discussions.”

 Apparently, little through the spring, summer and fall. Florida Senate leaders were incredulous in April when they learned that even though the state knew $2 billion in federal funding was tenuous, little had been accomplished in more than 10 months. The feds and ACHA say they were waiting for the results of a “Navigant” study.

Keep in mind, too, what also was occurring during 2014:

• Even though the U.S. Supreme Court in 2012 had ruled the federal government could not coerce states to expand Medicaid, President Obama repeatedly lobbied publicly for states to expand their Medicaid programs. Liberal newspaper editorial boards and progressive think tanks and political candidates incessantly called for expanding Medicaid to every state. It’s free money, they always said. How can you turn it down?

• All the while, Gov. Scott was ensconced in his re-election campaign. In a step clearly aimed at assuaging his opponents and those who favored Medicaid expansion, Scott, to the surprise of many, reversed his opposition to Medicaid expansion and said he was for it at the start of the 2014 legislative session and at the peak of his campaigning. This came despite his spending millions of his own money to defeat Obamacare before being elected governor and his consistently expressing opposition to Obamacare.

Feds said they’d be flexible

But in spite of his new position, Scott did little in the 2014 legislative session to persuade the House to change its opposition to Medicaid expansion. Neither side — the feds, nor the Scott administration — showed much urgency during most of 2014 to change the LIP — the deadline approaching and the $2 billion at stake.

An ACHA spokesman said the agency and CMS held monthly calls to discuss the Florida’s Medicaid waiver. But it wasn’t until February, 2015, just before the legislative session began, that the pace of negotiations increased. 

Secretary Dudek, this past April 15, told the Senate Ethics Committee: “We had discussions in December (2014) and January (2015). CMS indicated it would be flexible in the normal time frames and that a new waiver would not be required.”

In that same hearing, former Senate President Don Gaetz said to Dudek: “We knew a year ago that LIP was ending or being radically changed. When we dealt with this in the past, we submitted a 235-page proposal to the federal government. Did we submit a formal proposal with narrative any time before late February or March of this year?” 

Dudek: “No sir. We were told we did not need to … They would have flexibility with us to formulate something with us together.”

According to an ACHA spokesman, state and CMS officials had “frequent communications” — five phone meetings — from mid-February to mid-March about LIP, although no agreement emerged.

CMS ties funds to Medicaid

Then, on April 6, despite all of the meetings and phone calls, and with lawmakers increasingly on edge about the fate of LIP funds, Dudek issued a press release. CMS has … “made no commitments around whether [it] will fund the LIP program or when [it] will reach a decision … CMS still has not offered a date or a time to continue discussions about the future of the LIP program.”

This was no accident; CMS officials knew the imminent deadline lawmakers were facing.

The pressure from Washington and on legislators intensified a week later.

April 14: Victoria Wachino, acting director of the CMS, sent a letter to the state regarding LIP. The next day, Justin Senior, Florida’s deputy secretary for Medicaid, responded to Wachino:

“Thank you for your letter of April 14, 2015, regarding the future of Florida’s Low Income Pool (LIP). Your letter, for the first time, clearly links a continued LIP with Medicaid expansion. In NFIB v. Sebelius 132 S. Ct. 2566 (2012), the U.S. Supreme Court explicitly warned the federal government against attempting to coerce states into participating in Medicaid expansion — yet that appears to be exactly what the federal government is attempting here.”

Mafia retribution and extortion at work.

To the Ethics Committee, Secretary Dudek said: “We worked under the understandings we had with them as to how we would negotiate this. We moved forward in as open a process as we thought we could. But they have 100% control over how this works.” 

The feds knew all along what they were doing. 

In turn, Scott, like a mob chief defending his turf, responded with his own retribution. On April 28, he filed suit against the Obama administration for attempting to coerce the state to expand Medicaid.

On that same day, the Florida House adjourned — three days early, with no budget passed and still no decision on the $2 billion in LIP funding.

Two heads of state in a power struggle, one trying to extort the other. The Legislature, caught in the middle, in disarray. It has about 45 days to pass a budget. And Florida taxpayers, low-income recipients of LIP care and hospitals and their employees — all collateral damage. 

Political power corrupts, absolutely.

Matt Walsh is editor and CEO of Observer Media Group Inc.