Expansion of Medicaid through the Affordable Care Act

Expansion of Medicaid through the Affordable Care Act, also known as “ObamaCare”

The state budget is being used to strong arm Medicaid expansion even though Governor Terry McAuliffe stated, on September 24, 2013, it is wrong to use the “threat of a government shutdown as a bargaining chip in other negotiations, including over the health care law.”  Even the Virginia Chamber of Commerce, who favors expansion, believes the issue should be separated from the budget process.  Unfortunately, five months after his statement, Governor McAuliffe and Senate Democrats are steadfast in including the expansion of Medicaid in this year’s budget rather than follow the guidance and recommendations of the bipartisan Medicaid Innovation and Reform Commission (“MIRC”), created in 2013. 

House Republicans are committed to promoting quality, affordable healthcare for Virginia’s most vulnerable citizens.  For this reason, it passed a budget plan that provides additional funding for hospitals like Chesapeake Regional Medical Center and our free clinics and community health centers like Chesapeake Care.  

Medicaid expansion, without reforms and careful planning, will adversely affect Virginia’s fiscal integrity.  We have all heard the federal government will reimburse states 100% the first three years.  Less advertised, is that this reimbursement is for patient care only- not the State’s cost to hire additional employees to implement and manage an expanded program.   It is estimated Virginia would need to hire one additional full time employee for every $1,000 new enrollees of Medicaid.  By most estimates, Virginia may have as many as 400,000 new eligible participants.   If just 2/3 of those eligible enroll in expanded Medicaid, a conservative estimate of the expense to the state is $16,000,000.00. This expenditure would be immediate and difficult to fund on a continuing basis without raising taxes or cutting other areas of the budget, such as public Education.   Nevertheless, it is inconsequential compared to the financial burden that occurs when Virginia must pay its projected 10% share of patient care. 

We often hear Virginia is foregoing 5 million in federal money each day it does not expand Medicaid; this equates to 1.8 billion dollars annually, which would be used to pay for patient care of new enrollees.   Ten percent of this is $182,500,000.00.  How will the General Assembly be able to fund $200,000,000.00 in additional and continuing annual expense without significant tax increases and/or budget cuts?  

It is important to note these are very conservative budgetary numbers as new programs normally cost more than anticipated.  For example, when Medicaid was created the first year cost was projected to be 238 million; the actual cost was over 1 billion.  When Medicare was first created, the projected cost in 1990 was 12 billion; the actual cost was 90 billion.  Further illustrating this concern is that the cost of Virginia’s current Medicaid program has increased by 1,600 percent over the last 30 years; 1.8 billion in 2004 to 3.7 billion in 2014.  Adoption of Medicaid expansion without reforms could leave Virginia with dire budget deficits.  To this, many have said we can simply cut or terminate the program.  However, the Affordable Care Act does not contain affirmative language that allows reduction or termination and some states are finding the “flexibility” the federal government promised when its program was approved, in fact, was not flexible when changes by that state were requested.   Unfortunately, we are discovering through the experiences of other states that the federal government will not relinquish control regardless of the promises made.  

While the foregoing is reason to allow the bipartisan, Medicaid Innovation and Reform Commission to complete its purpose, there are additional concerns that the federal government will change contribution rates and impose mandates after state Medicaid expansion- creating greater stress on Virginia’s resources.   We cannot indefinitely count on “free federal money” given the federal government is borrowing money from foreign countries (primarily China) at the rate of approximately $210,000,000.00 per hour or, $5,000,000,000.00 a day.  When the federal government backs out of or reduces its share, Virginia will be responsible for as much as, or greater than, 1 billion per year in new spending- forcing the General Assembly to increase taxes or make significant spending cuts.  After the recession, the state is struggling to restore prior cuts in public education; Chesapeake alone is operating with approximately $33,000,000.00 less than it was five or six years ago. 

Another factor in this debate is that at least 50% of new enrollees under Medicaid expansion may now go on the exchange to obtain an insurance policy with a 100% or significant federal government subsidy.  If a viable option with the federal government already exists, why reduce the federal government’s role and shift ultimate financial responsibility and unforeseen costs to the state? 

Much of the medical community believes the quality of everyone’s health care will suffer under current proposed Medicaid expansion, even for those with private insurance.   Canada may be an example of this- where the wealthiest of all go to a different country for care while the middle class and less fortunate are treated within the country.  If you are interested in learning more about this issue, you should visit http://www.youtube.com/watch?v=8nk78JK-zR4 which features Dr. Juan Montero, a resident of Chesapeake, and a person who has spent his entire life helping the less fortunate by founding Chesapeake Care Free Medical Clinic, serving on the Board of Directors of Physicians for Peace, and who has participated in countless medical mission trips.

This is an extremely complicated issue with enormous fiscal ramifications and should not be adopted in similar fashion as the Affordable Care Act, also known as “ObamaCare,” i.e., many legislators never read the terms of the ACA before adopting it and previously unknown facts continually come to light.  This is why Virginia, through bipartisan agreement, last year created the Medicaid Innovation and Reform Commission (“MIRC”)- to ensure Virginia handles this issue with reliable information, careful analysis and reforms.

Anyone interested in communicating his or her opposition to expansion can do so by signing the online petition at www.passthebudgetterry.com or calling Governor McAuliffe’s office at 804-786-2211.


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