Florida legislators racing against the clock on a new state budget struck a deal Friday on a $2 billion plan to steer money to more than 200 hospitals that treat large numbers of low-income patients.
House and Senate budget negotiators will sink $400 million in state tax dollars to replace some of the lost federal funds from the Low Income Pool fund that is expected to end this summer.
The deal removes a major obstacle to finalizing a new state budget. State government would be partially shut down if a new budget isn't passed by the end of June. It's also a relief to hospitals that were anticipating more extensive cuts.
Senate President Andy Gardiner, an executive at an Orlando hospital, had pushed to help hospitals dealing with the loss of federal aid. He said that the agreement would allow the hospitals to transition as the low-income pool money is reduced.
"It's important though, that we provided some stability in the health care system for hospitals," Gardiner said.
The issue blew up the regular session because the Senate wanted to take federal money to expand Medicaid to roughly 800,000 Floridians, which would make hospitals less reliant on the federal funds because they'd have more paying patients.
But Gov. Rick Scott and Republican House leaders were adamant against taking any money tied to President Obama's health law.
The Senate compromise would have brought more federal money to Florida while allowing recipients to choose private insurance instead of a straight up Medicaid expansion, but the House voted it down last week during the special session.
As several hospital officials warned they would be forced to close or cut services without the funds, Scott has worked to show that hospitals are not in as bad of financial shape as they maintain. He even proposed a hospital profit-sharing plan.
Jackson Health System officials said the small cuts under the new deal would not noticeably affect services.
"This projected loss is much more manageable than a devastating cut of approximately $200 million that we anticipated just a few months ago," CEO Carlos Migoya said in a statement.
The Obama administration has tentatively said it would partially extend the hospital funds for two more years. The federal funding would be $600 million in the 2015-16 fiscal year — down from about a billion in the current fiscal year— and just over $300 million next year.
The administration says it's more effective to give consumers insurance than to pay hospitals for caring for the uninsured retroactively and will not give Florida any hospital funds to help folks who would be covered if the state had expanded Medicaid.
The disagreement about Medicaid expansion and how to fill the hole in Florida's budget got so tense that the House abruptly adjourned three days before the session was scheduled to end May 1.
The governor is also suing the Obama administration over the matter, accusing them of withholding the hospital funds because the state won't expand Medicaid.
Budget negotiators plan to work over the weekend to resolve remaining differences in school spending and environmental programs.
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