WITH NEAR unanimity, Republicans in Richmond have refused to expand Medicaid and use federal funds already rendered by Virginian taxpayers to provide health coverage to 400,000 currently uninsured poor residents. Their rationale is that the expansion would imperil Virginia’s long-term fiscal standing by leaving the state on the hook if the feds backed away from their commitment to handle no less than 90 percent of the $2.4 billion annual cost.
What if Virginia could extend coverage to those uninsured residents at no risk to its bottom line? That’s the question posed by a bold proposal from the state’s struggling hospitals. Republicans should support it, not least because it would mainly benefit residents in their own districts.
Virginia hospitals, especially in those poor and rural areas, have been struggling to manage a financial crunch of their own caused by the GOP’s refusal to expand Medicaid, along with the mandate that they provide free or low-cost care to poor and uninsured patients. Increasingly desperate for federal funding under Obamacare — the same funding the GOP blocked — the hospitals have embraced a tax they’ve long opposed.
The tax would be assessed on hospital revenue, which hospitals now say they’d support if the funds yielded were earmarked for health care, thereby drawing down federal matching funds under Medicaid. The hospitals also insist that the state would commit to maintaining its planned subsidies for health care.
That’s a win-win proposition. For the hospitals, it means higher reimbursements for services rendered to Medicaid patients, which have fallen precipitously for a decade. For the state, it means extending coverage to thousands of uninsured residents, at no risk of short- or long-term fiscal impact, since the state would incur no new budgetary obligations.
Just how much federal funding would be unlocked depends on the rate at which hospitals would be taxed. At a 2 percent rate, the hospitals would pay some $250 million, which would be matched by the same amount of federal funding under the existing Medicaid program, According to the Virginia Hospital and Healthcare Association. A 4 percent levy would yield $500 million from the hospitals, and more importantly trigger a windfall for the state under Obamacare’s full Medicaid expansion — an estimated $2.7 billion annually in federal funds.
That infusion of federal cash would extend coverage to uninsured Virginians; buttress the balance sheets of struggling rural hospitals, nearly half of which are losing money; and provide a badly needed economic boost for dozens of stressed communities across the commonwealth.
The idea was embraced even before the hospitals had a chance to announce it by Gov. Terry McAuliffe, a Democrat. Given the overheated partisanship in Richmond, that may have undercut its chances in the Republican-dominated House of Delegates, which is led by Speaker William J. Howell (R-Stafford).
But the hospitals’ strategy squarely addresses Mr. Howell’s own principal objection to Medicaid expansion, which is the danger it poses for the state’s future budget. The plan holds the state harmless, while at the same time drawing down major new federal funding. How about it, Mr. Howell?