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June 2, 2015

The Cost of Doing Nothing

States across the country are reaping the rewards of using federal dollars to provide health care to their low-income residents. But not Virginia. 

Here, misguided opposition by lawmakers to closing the health coverage gap has meant that 195,000 Virginians still can’t get the care they need to stay healthy and be productive. And it means that state lawmakers who claim they are fiscally responsible are needlessly costing the state money.

Back in November, we gave an early preview into how Arkansas, Kentucky, Michigan, and New Mexico freed up precious resources for critical needs like education by closing their coverage gaps. And we detailed how the same could have been true for Virginia to the tune of about $161 million a year.

Now states have had more time to take stock of the benefits of closing the coverage gap, and overall, the results are even more impressive than originally projected.

In less than two years from closing their coverage gaps through June 2015, Arkansas will save a total of $120 million, Kentucky will save $109 million, and Washington state will save $392 million, according to a recent report from the Center on Budget and Policy Priorities. Meanwhile, Michigan saved $180 million from when it expanded coverage in April 2014 through September 2014 and is set to save another $190 million from October 2014 to September 2015. And New Jersey Governor Chris Christie has proposed savings of $565 million from closing the coverage gap from July 2015 to June 2016.

In Virginia, the savings from closing the coverage gap beginning January 2014 could have topped $230 million through June 2015. These savings come from things like spending less on care for people without coverage at safety net hospitals, as well as the $13 million recently allotted for the state’s new mental health program for low-income people. Had state lawmakers closed the coverage gap, all of the services of the new program and more would have been paid for by the federal government. Instead, the federal government is only paying about half while the state has to pick up the rest of the costs.


And there are benefits beyond the savings and the health care coverage.

Some states that have closed their coverage gaps are also collecting additional tax revenues from the infusion of federal funds into their health care sectors. For example, Arkansas will collect a total of $34 million more in tax revenue, Michigan will collect $26 million more, and Washington state will collect $34 million more, according to a report from the Robert Wood Johnson Foundation.

The evidence in favor of closing the coverage gap continues to pile up as state after state experiences the advantages. We could experience these advantages here too. Instead, Virginia lawmakers have squandered $230 million in taxpayer dollars that could have gone towards building a stronger economy and safer communities.

–Massey Whorley, Senior Policy Analyst

The Commonwealth Institute

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