State Budgets

Friendly Advice to Governor-Elect McAuliffe on Medicaid Expansion

For Virginia Governor-Elect Terry McAuliffe, the time to govern will soon arrive. At his inauguration, McAuliffe assumes the helm of a Commonwealth facing unique challenges. Chief among those is the question of Medicaid expansion in Virginia.

Medicaid expansion is wrong for Virginia because it will not improve the health of the low-income residents who need it most, and it will saddle state taxpayers with unaffordable costs.

A randomized, controlled study in Oregon, a state that expanded its Medicaid program, reveals that the new recipients of government insurance enjoyed no significant improvement in several tested physical health outcomes. Those individuals, when compared to other equally eligible patients, had no increased diagnosis or use of medications for those issues; including hypertension and high cholesterol. The negative results outweighed the positive results, leaving recipients not much better off with Medicaid than without any coverage.

Positive results for new Medicaid patients depend on the availability of doctors. However, the 2008 Health Tracking Physician Survey showed that only 42 percent of primary care physicians would accept new Medicaid patients. Virginia is already at or below average for the number of doctors available per resident. Clearly, expanding Medicaid will not improve the health of state residents, as the Medicaid demand will far outstrip the supply of medical personnel.
Sadly, some policy makers in Richmond are so eager to accept more federal funding they ignore the data on health outcomes and fail to consider the longer-term fiscal danger to Virginia taxpayers.

Arizona expanded Medicaid in 2000 to a group even smaller than proposed by the Affordable Care Act. Arizona leaders expected that there would be lower costs for uncompensated care. By 2008, costs were 400 percent higher than predicted, even with rigorous cost controls in effect.

Despite federal assurances that it will reimburse no less than 90 percent for the newly eligible Medicaid recipients over the long term, there is no guarantee. In fact, it is more likely future fiscal constraints will render this promise impossible and states like Virginia will be left holding the bag for funding. Virginia cannot agree to accept such a financial burden without knowing the total cost, or if that percentage of support will be consistent.

The Medicaid Innovation and Reform Commission (MIRC) is fast-tracking expansion to cash a check from the federal government. Pro-expansion legislators claim that if the Commonwealth does not expand Medicaid, Virginia’s taxpayers are not getting anything in return. The “Give us our money back!” argument is the least valid in Virginia, of all states. Virginia’s economy heavily relies on federal spending, in both Northern Virginia and Hampton Roads. When the federal government overspends, the eventual shortfall will be felt in Virginia.

At the last MIRC meeting, even after hearing of successful alternatives in other states, Health and Human Resources Secretary Bill Hazel suggested to the MIRC that the reforms ordered by the General Assembly might have already been met–which would clear the way for expansion.

Governor-elect McAuliffe should encourage the MIRC to put the brakes on expansion to consider Virginia’s alternatives. Medicaid Cure, a successful program launched in Florida, gives patients a choice of several plans that can be customized to fit their needs. Research shows that Medicaid Cure patients outperformed recipients of old Medicaid in several health categories. Based on projections from the five-county pilot program, Medicaid Cure will save Florida $1 billion annually when extended statewide.

Alternatively, Governor-elect McAuliffe could call on President Obama, who campaigned alongside him, for a federal waiver, allowing a block grant for Medicaid spending. This would give Virginia the opportunity to institute its own unique reforms without committing to an extension of costly government-run insurance.

Medicaid, as it stands today, is an expensive, ineffective program. Governor-elect McAuliffe should not let his administration get off on the wrong foot by allowing Medicaid expansion to go into effect.

In Depth: State Budgets

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