Virginia Back to Drawing Board on Medicaid Expansion as National Efforts Lag

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By Victoria Pelham

Virginia’s health secretary is not surprised by the failure of the state’s latest bid to expand Medicaid, but predicts some soul searching among players this summer to think about next steps.

“We still have work to do; that’s all it means,” William Hazel Jr. told Bloomberg BNA April 12.

Gov. Terry McAuliffe’s (D) attempt to push forward with the growth of the safety-net program through a budget amendment fell short recently with pushback from the commonwealth’s House Republican lawmakers. The blow came amid a national flurry of interest in Medicaid expansion in the wake of the stalled congressional GOP bill to repeal and replace the Affordable Care Act. But the renewed expansion efforts have yet to come to fruition.

“What is distressing is that even with the administration offering to support expansion in an altered format through [Section] 1115 [waivers], there doesn’t seem to be a groundswell,” Sara Rosenbaum, a health policy professor with the George Washington University, told Bloomberg BNA April 14. “The uncertainty is sort of casting a pall over efforts to get ahead of the steam of a notion of expansion.”

What Happened?

The Affordable Care Act called for states to expand coverage to adults making 138 percent of poverty level, an expansion that was made optional by the U.S. Supreme Court in 2012. So far, 31 states plus the District of Columbia have expanded their Medicaid programs under the ACA.

McAuliffe, who became governor in January 2014, has made many bids to expand Virginia’s safety net insurance.

Virginia’s decision not to expand has cost the commonwealth $10.4 billion in uncompensated care, according to the governor and Hazel. And it has cost around 400,000 eligible Virginians access to health insurance, they argue, often driving them to emergency rooms for more expensive care and sometimes saddling families with medical bills that send them into bankruptcy.

Further, by denying expansion, lawmakers have prevented a desperately needed “shot in the arm” in the form of Medicaid reimbursement for struggling rural hospitals, like one that closed recently in Lee County, Hazel said.

Virginia is already paying additional Obamacare taxes, so why not keep that money in state to bolster care? he added.

Hazel believes misinformation—about Medicaid coverage’s effectiveness, about the potential collapse of the ACA under its own weight and especially about the state price tag of expansion—has played a role in its intense opposition.

“That doesn’t make any sense because at least prior to now the [federal government] is paying 100 percent of the expansion population for costs, so how could that possibly blow the budget of the state?” he said.

Hazel noted expansion opponents’ deep distrust of the federal budget and the government’s commitment to paying its share.

Among the concerns cited by Republican opponents of expanding Medicaid is the state-federal program’s sustainability. Medicaid is projected to grow in costs from $334 billion in federal costs in fiscal year 2015 to $624 billion by 2026.

The basic federal Medicaid match for expansion has never been cut, Hazel argued, but if it were to change, he points out that McAuliffe has said the state could reconsider.

Rosenbaum called Medicaid expansion an “incredible bargain” for states even at the reduced 99 percent match rate.

“I find it just a total head-scratcher as to why states would act so contrary to their own interests, their own economic interests and interests of their own residents,” Rosenbaum said.

Rosenbaum also serves as chairwoman of the Medicaid and CHIP Payment and Access Commission, a congressional advisory group, but was not speaking on behalf of that group.

Pockets of Eagerness

“Pockets of eagerness,” encouraged by stalled Republican efforts to overhaul health care, have cropped up in recent months such as in Kansas, North Carolina and Virginia, she added.

Many analysts pointed to the outcome as a sign that Medicaid expansion was irreversible at this point.

And the Trump administration has promised states greater freedom to run their Medicaid programs as they wish, whether by promoting work or other personal-responsibility add-ons in waivers.

Still, these pockets have been met with staunch pushback and undermined by the larger uncertainty over ACA repeal-and-replace conversation, which still hangs in the balance. In Kansas, for example, the expansion was vetoed by a Republican governor, and in Virginia it was thwarted by a Republican legislature.

Playing Politics?

Virginia is facing an election year including in the state house and governor’s office and is due for a new speaker of the house after a resignation. These issues will likely be highlighted and play a role during the election cycle, Hazel believes.

Once the elections sort themselves out, even if lawmakers don’t say they want to expand Medicaid, he added, “are they willing to sit down and say, look, if Medicaid expansion is not going away across country, a majority of states have taken money and we’re paying in. Are we going to continue to be the holdouts, or are we going to find a way to make coverage work in Virginia?”

The results are inevitable, he said, but will take serious discussion on both the local and national levels.

“While Republicans continue to play politics with the health of our residents, we will continue to investigate every available option to expand Medicaid in Virginia,” McAuliffe said in a statement.

Rosenbaum said if Virginia had a Republican governor, this could make conservative state lawmakers more likely to listen to a push to expand.

“If this is just simply raw politics, it has cost the state and its residents so much,” she said. “It’s done tremendous damage over the past several years for people who just are left without access to care.”

To contact the reporter on this story: Victoria Pelham in Washington at vpelham@bna.com

To contact the editor responsible for this story: Brian Broderick at bbroderick@bna.com

Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.

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