NCPA - National Center for Policy Analysis

Virginia's Medicaid Expansion

September 19, 2013

In June 2012, the U.S. Supreme Court ruled unconstitutional those provisions of the Patient Protection and Affordable Care Act (ACA) that deny federal matching funds for Medicaid to states that refuse to extend  eligibility to individuals and families with incomes up to 138 percent of the federal poverty level (FPL). As a result, Virginia and other states now have the opportunity to compare the costs and benefits of expanding Medicaid eligibility, say Devon Herrick, a senior fellow at the National Center for Policy Analysis, and Linda Gorman, director of the Health Policy Center at the Independence Institute.

  • There are about 1.7 million individuals living in Virginia with incomes under 139 percent of the federal poverty level, although only about 486,000 of them lack health coverage.
  • Virginia Medicaid does not currently cover poverty-level, nondisabled adults.
  • Many of these individuals -- at least theoretically -- would become eligible for Medicaid under an expanded program.

Of the nonelderly Virginia families and individuals with incomes under 139 percent of poverty:

  • 423,200 million are already enrolled in Medicaid;
  • 485,800 lack health coverage;
  • 339,400 have employer coverage;
  • About 208,400 are covered by some other type of health insurance.

Most of the newly eligible would be adults, whereas most children in families at this income level are already eligible.

Virginia would be better served to free those earning above 100 percent of the federal poverty level to seek subsidized coverage in the health insurance exchange. For families earning less than 100 percent of poverty, Virginia could tailor its Medicaid program in ways that make sense and meet Virginia residents' specific needs. These services might include selectively covering some optional populations but not others.

The program might also involve providing limited benefits rather than an open-ended entitlement to whatever health care is available. In any case, some of this spending would still qualify for federal matching funds -- albeit at a rate of about 64 percent, rather than 90 percent.  The amount of benefits -- and the populations covered -- should reflect the preferences and priorities of Virginia taxpayers.

Source: Devon M. Herrick and Linda Gorman, "An Economic and Policy Analysis of Medicaid Expansion in Virginia," National Center for Policy Analysis, September 2013.


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