VA Medicaid expansion: What if the money isn’t there?

by Kathryn Watson


If Virginia legislators expand Medicaid, the federal government has promised to pay at least 90 percent of the costs in coming years.

But what happens if Virginia expands Medicaid and the federal funds simply aren't there?

It's a question that lingers for Delegate Steve Landes, the Republican vice-chairman of the Medicaid Innovation and Reform Commission, as well as his colleagues in that group tasked with determining the future of the entitlement program.

"If the funds aren't there, somebody's ox is going to be gored," Landes said in a MIRC meeting Tuesday.

It's both a fiscal and a legal question.

Financially, how would Virginia foot the bill if the federal government doesn't come through on its funding promises?

And legally, could Virginia take those people off the rolls?

Medicaid expansion in Virginia - should legislators choose it - could add up to 400,000 people to the program that already consumes about one-fifth of the state's general fund spending at 1 million enrollees.

Legally, the question is still up in the air, although Health and Human Resources Secretary Bill Hazel said it's possible to take thousands off Medicaid. But no state has been granted the ability to opt-out from the federal government, Landes said.

"It's definitely legally questionable for people to say, well we can expand for a couple years, then roll it back," Jonathan Ingram, director of research for the Florida-based, conservative Foundation for Government Accountability, told "I also think it's politically questionable."

The politics, perhaps, are the crux of the matter.

Johnny Joannou, a Democratic MIRC member who has focused on Washington's lack of trustworthiness on budgets, pointed out Tuesday the state would have to send letters to people saying they're no longer covered, not the feds.

"Who is going to give (a Medicaid recipient) the notice? Is it the state or the federal government?" Joannou said with fervor. "It's the state..."

But shrinking Medicaid roles after expansion is unlikely "knowing my colleagues and knowing the history of the General Assembly, and knowing those groups that would be the first to scream bloody murder if that were even proposed," Landes said.

"Since I've been in the Legislature we have never to my knowledge, we've adjusted people in Medicaid, but we've never taken them off" en mass, Landes said.

So, that leaves three options - raising taxes, cutting Medicaid services for all, or cutting another area, likely education, the state's largest budget driver.

Two schoolteachers testified against expansion last week for that very reason.

The commission will have until its next meeting, likely in December, to mull over the dozen-plus hours of testimony it's heard.

Most of the experts invited to speak so far have leaned in favor of expansion. But two experts who testified Tuesday on behalf of the Medicaid Reform Team, a group of right-of-center policy experts, said expanding Medicaid the federal government's way isn't the way to do it.

"Expanding Medicaid would direct those dollars away from the truly needy," testified Christie Herrera, senior fellow with the Foundation for Government Accountability.

BY THE NUMBERS: In a nutshell, here's what some members of the Virginia Medicaid Reform Team had to say in a press conference on Tuesday.

65 percent - the percent Medicaid compensates doctors, compared with private insurance.

"Medicaid is the lowest payer of any payers," said Devon Herrick, an economist and senior fellow with the National Center for Policy Analysis.

One in four - the percentage of doctors in Virginia that aren't accepting new Medicaid patients, Herrick said.

400 percent - how much more expanding Medicaid to childless adults cost in Arizona than expected. The state had to eventually scale back its unsustainable program, said Joe Luppino-Esposito, an editor at the policy group State Budget Solutions.

$188 million - how much Medicaid expansion would cost Virginia in 2022 alone, according to estimates from the Obama administration and Urban Institute.

"We're going to have to cannibalize other social programs," said Drew Gonshorowski, a policy analyst with the Heritage Foundation.