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June 12, 2014

It Doesn’t Have To Be This Way

By clinging to their refusal to close Virginia’s health coverage gap, lawmakers are leaving hundreds of millions of dollars on the table that could be used to avert damaging cuts to schools and other vital services.

The state is staring down a potential budget shortfall of $1.45 billion over the next two years due to lower-than-expected revenues. To handle it the House and Senate are on the verge of cutting funding for pressing needs and tapping into the state’s rainy day fund. The cuts would hit K-12 and higher education, public safety, veterans, and water pollution grants.

But if lawmakers closed the coverage gap that is keeping hundreds of thousands of Virginians from getting available health insurance, the state could save $225 million during the next budget cycle. That’s because Virginia currently funds a wide range of services for the uninsured with state dollars. Federal money is available to the state to close the coverage gap, so the state wouldn’t have to be paying for those services with state dollars anymore. But Virginia lawmakers, particularly in the House, have stubbornly rejected the offer.

The money the state could save represents about 27 percent of the proposed cuts and could eliminate the need for the proposed $106 million in cuts to K-12 education, $34 million in cuts to public safety, and it could also help soften the blow to higher education and human services


Lawmakers have options about how to handle the savings from closing the coverage gap. If they invested the savings in a trust fund, for example, they could pay for the program through 2050 at no cost to the state. One approach – given the budget shortfall – would be to invest half the savings in the trust fund and use half to restore funding for the most pressing needs. Taking this approach, lawmakers could still close the coverage gap through about 2038 at no cost.

Lawmakers are claiming that their approach is financially responsible, but they have removed a sensible solution from the table. Instead of helping the people of Virginia by closing the coverage gap with federal tax dollars that are there for the taking, they would rather meet the budget challenge by cutting funding for services and using state tax dollars from the rainy day fund.

–Massey Whorley, Senior Policy Analyst


The Commonwealth Institute

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