By Joe Luppino-Esposito and Bob Williams
Originally posted by State Budget Solutions on August 16, 2013

In June of 2012, the U.S. Supreme Court’s Medicaid ruling on the Affordable Care Act (ACA) gave states the option not to expand Medicaid without losing their current federal funding for the program. Virginia is one of the last states to decide if it will participate in the Medicaid expansion as prescribed in the landmark 2009 federal law. The Virginia General Assembly assigned the duty of studying Medicaid expansion to the Medicaid Innovation and Reform Commission (MIRC). The 12-member commission brings together five members each from the House and Senate and two members of the executive branch to review a number of proposals to change or reform Medicaid and other health services options in the Commonwealth.

The rising cost of Medicaid is a serious concern. In a letter to U.S. Health and Human Services Secretary Kathleen Sebelius, Virginia Governor Bob McDonnell noted that Medicaid spending takes up nearly 21 percent of Virginia’s general fund spending. Virginia’s current Medicaid enrollment exceeds one million residents. The state spends over $3 billion per year for its share of Medicaid, and costs have been increasing at a rate of over nine percent per year.

Virginia enjoyed some relief in fiscal years 2009 and 2010 when the federal government increased its share of funding for Medicaid services, lowering the Commonwealth’s share to just under 40 percent. That number has now fallen back to pre-recession levels, with Virginia once again picking up half the tab for Medicaid. It’s no surprise that state leaders want to return to a time of receiving more “free money” to cut the state’s share of health care costs.

While there are many questions about the best way to proceed, one thing is certain: ACA Medicaid expansion would give Virginia billions of federal dollars per year to provide government insurance to many more of its residents. The assumption is that when more low income residents have medical insurance coverage, care and access for those residents will improve and costs for uncompensated care will be reduced. In reality, the results are counterintuitive. Medicaid has fallen short of delivering proper health care to low income residents, and other expansions of Medicaid, done in a similar fashion to what is provided in the ACA, have fallen short of delivering the promised cost reductions.

Click here to download the entire brief to learn some of the current problems with Medicaid coverage, anticipated problems with accepting Medicaid expansion and discuss alternatives and reforms that will better serve Virginians.

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