March 6, 2015
Bad Information on Medicaid in Virginia is Persistent and Costly
The 2015 General Assembly session may be over, but one big problem remains: lawmakers still refuse to close the health care coverage gap.
That refusal has cost the state $1.8 billion in federal money so far and kept 195,000 Virginians from getting the health care they need. And at the heart of the problem lay mistaken notions about Medicaid in Virginia that remain stubbornly persistent in public discourse and serve as baseless excuses for legislators’ refusal to budge.
A favorite smokescreen is the claim that Medicaid needs to be reformed before it can be expanded. However, this claim neglects the fact that recent Medicaid reforms are not only in place in Virginia, but are exceeding expectations. For example, improved oversight is already saving $98.5 million in the behavioral health provider network. And the cost of the state’s private managed care plans have come in $71 million under budget.
The bottom line is despite attacks on an “out of control” system, Medicaid in Virginia actually is running a $312 million surplus. You read that right.
That pleasantly surprising financial situation is a big part of why state lawmakers have agreed to add more people to the state’s Medicaid program. Yes you read that right, too: Virginia lawmakers added people to the Medicaid rolls this session.
But they did it in a way that is less effective and more expensive than they could have. You see, Governor McAuliffe couldn’t close the coverage gap all on his own, but he did use a portion of that Medicaid surplus and his executive authority in the fall of 2014 to extend coverage to some Virginians most in need. He carved out $90 million to help as many as 20,000 people with serious mental illness get some care. He also undertook initiatives to provide pregnant women dental coverage and increase outreach efforts to enroll as many eligible children as possible.
Legislators could have removed the funding and reversed these steps. Instead they agreed to keep the programs going and split the cost of these initiatives with the federal government. That might sound good until you hear that there was, and still is, a better deal on the table.
Had legislators agreed to close the coverage gap, they would have saved the state $90 million because the people with serious mental illness would already be covered. Had legislators agreed to close the coverage gap, they could have saved the state $114 million each year paid to UVA and VCU hospitals for the care provided to people who can’t afford insurance, because they would already be covered. Had legislators agreed to close the coverage gap, they could have saved the state $30 million each year for inmates’ hospital care and nearly offset the $31.4 million hole in the corrections’ budget for providing inmates health care that had to be filled with state funds. Had legislators agreed to close the coverage gap, they could have saved $23 million per year for people who use community mental health care because they would already be covered. But legislators didn’t.
Medicaid in Virginia is being reformed. Medicaid in Virginia is running a surplus. Lawmakers used the savings from the reforms to add more people to the rolls. Lawmakers should take the next step, close the coverage gap, and finish what they started.
–Massey Whorley, Senior Policy Analyst