6 Reasons Why Medicaid Expansion is Still Wrong for Virginia

Christie Herrera
Vice President for State Affairs and Policy Fellow
Foundation for Government Accountability

This is a make or break week for the Virginia General Assembly. With work on the budget underway, lawmakers are now grappling with Governor Northam’s push to expand ObamaCare.

Here are six reasons why the best course forward is for Virginia to reject Medicaid expansion—once and for all.

#1: Virginia already has a massive Medicaid spending problem.
Medicaid costs are projected to rise nearly $300 million in Virginia through fiscal year 2018—consuming the largest share of available revenue—even with enrollment levels staying the same. Even without expanding Medicaid, Virginia is faced with unsustainable costs and a budget shortfall that is already straining available funds.

#2: Virginia’s ObamaCare Medicaid expansion enrollment is likely to skyrocket out of control.
States that implemented ObamaCare’s Medicaid expansion have enrolled more than twice as many able-bodied adults as promised. Some states have enrolled more people than they ever thought were even eligible for Medicaid. Based on these over enrollment projections, if Virginia were to expand Medicaid, an estimated 506,000 able-bodied adults would be added to welfare—nearly 200,000 individuals more than the original estimates.

#3: Covering ObamaCare Medicaid expansion enrollees is more expensive than you think.
Higher-than-expected enrollment and higher-than-expected costs have led to ObamaCare’s Medicaid expansion busting budgets. A review of every state with available spending projections and actual cost data reveals that taxpayers have spent more than double on ObamaCare Medicaid expansion than state officials initially predicted.

#4: Able-bodied childless adults should not be put at the front of the line.
Expanding ObamaCare in Virginia would move hundreds of thousands of able-bodied adults to the front of the line. These are able-bodied adults in their prime working years, 85 percent of whom have no dependent children. Meanwhile, more than 16,000 Virginians with intellectual and developmental disabilities languish on a Medicaid waiting list for needed home and community-based services.

ObamaCare’s Medicaid expansion will only make this problem worse. After Ohio expanded Medicaid to able-bodied adults, the state eliminated Medicaid eligibility for more than 34,000 seniors and individuals with disabilities. Alaska’s governor robbed $1 million from the state’s Mental Health Trust Fund to pay for its expansion.

#5: Provider taxes are a risky way to fund ObamaCare’s Medicaid expansion.
There are several proposals in the Virginia General Assembly to fund an ObamaCare Medicaid expansion through a provider tax on Virginia’s hospitals. At the federal level, both Democrats and Republicans alike have proposed cutting or eliminating provider taxes as a way to fund Medicaid. New Hampshire recently received a letter from the Trump Administration saying its scheme was illegal, forcing the state to find new ways to pay for its ObamaCare Medicaid expansion.

Even if the provider tax survives, it still may not cover Virginia’s share of Medicaid expansion costs.  Federal law currently caps provider taxes at six percent of net patient revenue. Considering the massive over-enrollment and budget overruns in other states, provider tax revenue may not be enough.

#6: Virginia should run away from—not embrace—Arkansas-style Medicaid expansion.
Some lawmakers in the Virginia General Assembly have revived the idea of an Arkansas-style Medicaid expansion that would put able-bodied, childless adults onto the federal health insurance exchange, funded with Medicaid money.

The failures of Arkansas’ Medicaid expansion have been well documented, but here are some things to keep in mind. Arkansas’ Medicaid expansion is running about 80% over budget, and is about twice as expensive as regular Medicaid. What’s worse, Iowa copied the Arkansas model and ended the program within 18 months, after premiums skyrocketed, one insurer went bankrupt, and the other insurer dropped out of the program altogether. Virginia shouldn’t make the same mistake.

While the makeup of Virginia’s General Assembly has changed, the facts surrounding ObamaCare’s Medicaid expansion have not. It has been a massive policy failure, costing expansion states millions of taxpayer dollars and putting critical priorities in jeopardy. If you have questions, or if you need technical assistance, contact Christie Herrera at christie@thefga.org.