Virginia’s Medicaid program will need an extra $281 million during the current two-year budget, adding to the state’s already substantial budget woes and reviving Richmond’s bitterly partisan battle over expanding health-care for the poor.
The projected cost overrun, disclosed to legislative budget leaders Tuesday, comes on top of the $9.3 billion the state had budgeted to fund the health-care program through fiscal years 2017 and 2018. It was disclosed two months after Gov. Terry McAuliffe (D) revealed a $1.5 billion budget hole, which has already forced the state to scuttle raises for teachers and consider other painful cuts.
Republican legislative leaders said the new Medicaid estimate validated their efforts over the past three years to block McAuliffe’s marquee campaign promise: expanding Medicaid under the Affordable Care Act.
“We continue to see costs on an unsustainable trajectory, even when enrollment levels stay the same,” House Speaker William J. Howell (R-Stafford). “We must look at ways to reform Medicaid in order to protect precious taxpayer’s dollars. This forecast reinforces the wisdom of our decision not to expand Medicaid under the Affordable Care Act.”
Through a spokesman, McAuliffe pledged to work with the GOP-controlled General Assembly to cover the higher Medicaid costs. But he also took a shot at Republicans, who in recent years have blocked expansion for low-income Virginians while expanding the most expensive part of the program, which provides long-term care for the elderly and disabled. Those services account for one-third of Medicaid enrollees but two-thirds of the program’s cost, administration officials said.
“The Governor is prepared to work with the General Assembly to ensure that the increase in the Medicaid forecast is reflected in the budget they will pass this upcoming session,” McAuliffe spokesman Brian Coy said in an email. “However, growth in the current Medicaid program has nothing to do with bringing Virginians’ taxpayer dollars home to expand access to health care for people who need it. … Instead of manipulating the issue for political gain, Republicans should do the right thing for their constituents and the state budget by coming to the table around a common sense solution for closing the coverage gap.”
Administration officials said the $281 million in extra costs is partly the result of rising premiums, set by the federal government, for some enrollees eligible for medical services and prescription drugs. They also blamed the higher cost and utilization of mental-health services.
Under the Affordable Care Act, states that allow more people onto their Medicaid rolls can pass along most of the cost to the federal government. Eventually, states are supposed to pay 10 percent.
Since running for governor in 2013, McAuliffe has sought to extend health-care benefits to 400,000 uninsured Virginians. With Washington promising to pay most of Virginia’s $2 billion-a-year cost, he said expansion would help needy Virginians and create more than 30,000 jobs. More recently, he has also suggested that expansion would help the state tackle rising opiate addictions.
“Expanding Medicaid will save Virginia $211 million in the current budget by using federal money to reduce the cost of care for people who do not have health insurance,” Coy said. “Those savings could be invested in Virginia’s mental health system, treatment for heroin and opiate addictions or other priorities that will make life better for Virginians.”
Republicans have objected to expanding an entitlement program to able-bodied adults. They also have questioned how Washington can afford to make good on its promise to pick up most of the tab. Even if it does, some Republicans say the state’s $200 million-a-year share would crowd out other priorities.
“We cannot ignore the truth on Medicaid,” said House Majority Leader Kirk Cox (R-Colonial Heights). “Medicaid remains the largest growth driver in our budget. Medicaid expenditures will consume the largest share of available revenue, limiting our options in K-12 education, higher education and public safety as we try to make up an already large shortfall. This strengthens our position that Virginia must continue to reform its current Medicaid program before we consider expansion.”