Medicaid expansion is the industry’s biggest issue

Published February 28, 2014 by Robert Powell, III

The biggest issue facing Virginia’s health-care industry as the General Assembly entered its last weeks was the expansion of Medicaid.

Medicaid expansion was supposed to be a big part of the Affordable Care Act passed by Congress in 2010.  A 2012 U.S. Supreme Court ruling, however, let the states decide if they would expand their programs.

The federal government would pick up 100 percent of a state’s cost in Medicaid expansion until 2017. The federal share then gradually would fall to 90 percent. An additional 400,000 Virginians would be eligible for Medicaid with expansion.

The Virginia General Assembly last year left the decision to expand or not expand the program in the hands of the 10-member Medicaid Innovation and Reform Commission. After a series of hearings, however, the panel has made no decision.

Many Republican legislators are skeptical that the federal government will be able to keep up its end of the bargain in supporting expansion. They believe the state would be left responsible for a bloated, inefficient program that would crowd out funding for essential state services.

Newly installed Gov. Terry McAuliffe has been a vocal proponent of expansion, saying the federal money it brings to the state would help stimulate the economy and create jobs. Otherwise, he says, Virginia tax dollars simply would wind up going to other states.

For many hospitals, the issue could have big consequences. The ACA cuts Medicare payments and reduces the amount of money paid to hospitals treating uninsured patients. The cuts anticipated that the lost revenue would be made up by more patients with insurance coverage.

Two of Virginia’s biggest hospitals, VCU Health System and the University of Virginia Medical Center, treat a high number of the state’s poor and uninsured patients. With the ACA cuts, they expect to lose $500 million from 2017 to 2022.

At press time, a two-year budget proposed by the House of Delegates would provide hospitals an extra $81 million but would not expand Medicaid. The Senate budget proposal would use $1.7 billion in federal taxes paid yearly by Virginians under ACA to create a private insurance plan that would serve residents that would be covered under Medicaid expansion.

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