The Challenges with Medicaid Expansion in Virginia

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Kate Miller
Virginia Free Citizen

As healthcare reform occurs throughout the nation, Virginians voice their opposition to Medicaid expansion.

Funding Limitations

The promised levels of Federal funding for Medicaid expansion cannot be fulfilled.

The evidence is mounting. Paul Ryan, chairman of the House Budget Committee, recently stated that funds will not be available for Medicaid expansion.

Medicaid ExpansionThe funding streams for expansion have been greatly impacted by the disastrous roll-out of the ACA (Affordable Care Act). The federal government has recently refused to pay what they promised to Indian tribes for medical services. Health insurance companies are guaranteed a bailout because not enough young people are singing up for health insurance.

President Obama ignored the law eight times to try to save the ACA.

“If the federal government can ignore its contractual obligations, its own statutes and its own Supreme Court, then it certainly can ignore its own funding formulas too,” Richmond Times-Dispatch columnist Bart Hinkle stated.

The Cost in Virginia

In the outlying years, Medicaid expansion will bankrupt Virginia.

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Chmura Economics & Analytics estimated that Medicaid costs for Virginia will be just under $200 million per year in 2020.

If the reimbursement rate goes to 50 percent, the estimated cost to Virginia is two billion dollars per year, quickly consuming any savings between 2014 and 2016. The 50 percent match is likely to occur because President Obama has already suggested a “blended” reimbursement rate between 50 percent and 100 percent (see Medicaid time bomb). Currently, the Virginia legislature has no plan to deal with the budget shortfall when the 100 percent reimbursement begins to ratchet down in 2017. It would be extremely shortsighted for the legislature to consider expanding Medicaid until the hard decisions are made to address these budget challenges.

DMAS Reform Shortcomings

DMAS (Dept of Medical Assistant Services) reforms are far from complete. Most of the reforms are only in the very early stages of implementation and have not been proven to be successful.  The reforms in place must demonstrate positive results before expansion is even considered.

Good News for Hospitals and DSH (Disproportionate Share Hospital)

Hospitals have just been given a reprieve. The budget deal President Obama signed on
December 20, 2013 delays all DSH cuts until Oct. 1, 2015. Under current law, in fiscal year 2023, state DSH allotments will rebound to pre-ACA reduced levels with annual inflation adjustments. The hospitals have another two years to figure out ways to make up for lost DSH funding.

Considering DC has bypassed the steep cuts to (Sustainable Growth Rate) Medicare pay for physicians since 2003, it is unlikely DSH funding will ever be cut. Washington doesn’t have the political will to fight the powerful lobbyists.

“Private Option” Shortcomings

So called ‘Private Option” plans approved by CMS (Centers for Medicare and Medicaid Services) do not provide effective and market-based reforms. Recently, CMS approved waivers submitted by several states, such as Arkansas. Many are saying these waivers allow states to receive the promised federal funding for expanding Medicaid but provide the state with flexibility to manage Medicaid-utilizing private insurance plans.

The Private Option is not the free-market alternative to Medicaid expansion its architects in the Arkansas legislature hoped it would be.  In fact, the Private Option is nothing more than Medicaid expansion by another name, and its passage was the result of a series of empty promises that, until now, have gone unchecked.

For further details, visit the Foundation for Government Accountability’s website and search “empty promises.”

Kate Miller

About Kate Miller

Kate Miller is a multimedia journalist and graduated from Virginia Commonwealth University. She received a Bachelor of Science in Mass Communications with a broadcast journalism concentration. She attended Smith College in Massachusetts before attending VCU. This semester, she is reporting on the General Assembly for the VCU Capital News Service.

  • Bruce Jaggard

    What is DMAS? DSH? CMS?

  • Michael McLaughlin

    There is also another consideration. Obamacare has resulted in many Medicaid eligible individuals coming out of the woodwork. They are eligible under the existing system and will be added to Virginia’s Medicaid rolls. VA will have to pay 50% of the costs.

    As a result, even without Medicaid expansion in VA, Medicaid costs in VA will increase due to Obamacare.

  • Who knows, maybe that is the full goal. Force all the States into bankruptcy and then let the Federal government swoop in and take over. Makes it a bit easier to push Socialism on a Nation.

  • Virginia Free Citizen

    Thanks Bruce, we should have spelled those out, DMAS, DSH and CMS, will edit shortly