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October 20, 2015

Some Badly Needed Context on the Recent Medicaid Numbers

After a report last week from Virginia’s Joint legislative Audit and Review Commission showed state spending on Medicaid is up 79 percent over the past decade, opponents of closing the coverage gap jumped on this number as evidence that denying coverage to thousands who need it is justified.

It isn’t. And here’s why.

First, state lawmakers have made sure Medicaid in Virginia is needlessly restrictive. Coverage is limited mostly to poor children, pregnant women, the elderly, and people with disabilities. Most parents can’t get the coverage they need unless they are extremely poor – for example, a family of three has to make less than $10,300 a year for the parents to qualify. And adults without kids aren’t eligible at all. It’s also worth noting that Virginia is now in the minority of states that have not accepted the federal funds to open Medicaid to these adults.

Still, even with Virginia’s rigid eligibility levels, the number of people enrolled in Medicaid over the past decade rose by nearly 50 percent, which is the primary reason spending went up. Three factors drove this increase: the economy, an aging population, and more waivers approved by the General Assembly.

The enrollment growth occurred largely during the worst and most prolonged economic recession since the Great Depression and then a sluggish recovery made worse by federal sequestration. Most recently, Virginia ranked 48th nationally in economic growth. When you lose your job, you lose your health coverage if you were lucky enough to have it in the first place.

At the same time, the number of Virginians 65 years and older grew more than three times as much as the overall population resulting in a 30 percent increase in enrollment. As the insurer of last resort, Medicaid often steps in to help older people when they need the greatest – and most expensive – level of care, such as long-term care in nursing homes. And that level of care means that older folks, along with people with disabilities, make up 67 percent of Medicaid spending while only representing 26 percent of Medicaid enrollees.

While state lawmakers had no control over the national economy or the state’s aging population, the General Assembly, including the very people who oppose expansion, agreed to add more than 4,300 waiver slots for long-term care services for people who are intellectually and developmentally disabled over the past 10 years. That represents a 57 percent increase in intellectual disability waivers, which cost almost $71,000 per person per year, and a 137 percent increase in developmental disability waivers, which cost nearly $33,000 per person per year. Those added waivers cost approximately $285 million last year, alone.

Waivers bring valuable services to a very vulnerable group of Virginians, with a substantial price tag. But they are not necessarily directed to help people with low incomes. Meanwhile, state lawmakers refuse to provide targeted help to low-income working families in a move that would actually save the state money.

Add to all of this the steady rise of health care costs nationwide and it’s not hard to see why providing health coverage under Medicaid to those Virginians eligible for it would cost more now than it did 10 years ago. For context, the average individual premium nationwide in the private market has gone up 55 percent over the same time period. In fact, Virginia has diligently worked to limit cost growth, operating the entire public Medicaid system with just half the administrative costs of private plans.

Virginia Medicaid is an efficient public insurance program that forms the backbone of the health care safety net. Lawmakers know this. That’s why they’ve opened Medicaid to some of the most vulnerable Virginians time and again. They need to finish the job, and close the coverage gap all the way.

–Massey Whorley, Senior Policy Analyst

Find out what’s at play with closing the coverage gap at our policy summit Dec. 3.

The Commonwealth Institute

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