Medicaid expansion complicates Va. budget negotiations

House and Senate budget negotiators are both incredibly close and hopelessly deadlocked as a deadline looms for reconciling rival state spending plans.

Both chambers have passed two-year, $96 billion blueprints that are in step with each other on 99.9 percent of spending. House leaders say the differences — the House plan is more generous to higher education, for instance, while the Senate gives more to K-12 — are easy fixes.

“We’re less than one-tenth of 1 percent apart,” said House Appropriations Chairman S. Chris Jones (R-Suffolk). “I do not recall a time in my tenure when we were that close. We could work those differences out in two days max. They’re not that great.”

But there is a sticking point that is widely expected to keep the General Assembly from passing a budget by Saturday’s deadline: Medicaid expansion.

With Gov. Terry McAuliffe (D) and the Senate pushing hard for expansion and the House just as vigorously opposed, legislators are bracing for a long battle. They expect the 60-day session to either go into overtime or end on time Saturday but without a budget.

The latter development would necessitate a special session to complete work on the budget. The impasse could cause a government shutdown if a spending plan is not passed before the start of the fiscal year July 1.

Both chambers began with the budget plan left behind by departing governor Robert F. McDonnell (R), adding funds in some areas and taking them away in others. They did not always do so in the same way. For instance, the House added $11 million to what McDonnell had provided for mental health and the Senate added $24 million.

A conference committee has been working to reconcile those differences as well as the more daunting obstacle of overcoming disagreement on whether to expand Medicaid under the federal health-care law.

The partisan stalemate on Medicaid has come to dominate a General Assembly session marked by bipartisan consensus in other areas: reforming ethics, improving mental-health services and reducing the number of standardized tests given in public schools.

The health-care law allows states to greatly expand the federal-state health-care program for the poor and disabled, promising to pay most of the cost. McAuliffe, along with Senate Democrats and three Republicans in that evenly split chamber, are in favor. They say expansion would provide health care for 400,000 needy Virginians and create more than 30,000 jobs at a time when the defense-heavy state needs to diversify its economy.

Republicans point to the fiscal woes forcing Washington to cut defense and say the federal government cannot afford its current obligations, much less new ones. They fear Virginia will be stuck picking up the $2 billion-a-year tab.

Neither side has indicated that it will give in, although the Senate has cast its expansion plan as a compromise, since it would use the Medicaid money to buy private insurance under what it calls Marketplace Virginia.

“We will not go away,” Sen. A. Donald McEachin (D-Henrico) told reporters last week. “We’re here for however long it takes.”

Outside of the Medicaid issue, the budget differences seem easily surmountable. Both budgets include about $5 million to provide “cost of competing” funds for non-teaching staff at Northern Virginia schools. The money is used to supplement salaries in that high-dollar job market. McDonnell had included the funds for teachers but not for support staff.

Both the House and Senate count on savings from reforming school standardized tests. The House would save $6 million by eliminating five tests while the Senate would save about $2 million by cutting one. The Senate would spend nearly $9 million to expand pre-K programs, something the House does not support.

The House, however, spends more on higher education, adding $154 million to McDonnell’s budget while the Senate boosted it by $76 million. The House directs the extra funds toward hiring more faculty, limiting tuition increases and bankrolling research.

In an unusual twist, the GOP-dominated House added more money than the Senate for social services, about $68 million compared with about $56 million. Some of those funds, including more money for free health clinics around the state and for hospital inflation expenses, are meant to be an olive branch to hospitals pressing for Medicaid expansion.

In commerce and trade, both chambers made cuts to what McDonnell had sought. The House slashed $39 million in spending, compared to $11 million in Senate trims. The House cuts include $9 million for a slavery heritage site and $2 million for wind energy support.

The House budget also includes language meant to restrict abortion — amendments that would prevent funding for Planned Parenthood, prevent the governor from undoing strict building codes applied to abortion clinics by executive order, and prevent the state from paying for abortions in cases of severe fetal abnormalities.

Similar language has been included in House budgets in recent years but nixed during conference negotiations.

Laura Vozzella covers Virginia politics for The Washington Post.
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