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August 18, 2016

Virginia Has Another Chance to Get It Right on Health Coverage

Virginia residents may face another round of cuts to vital services because state revenues are coming in lower than expected. And, once again, a common sense solution to saving the state money and boosting Virginia’s economy is staring right at lawmakers: closing the health care coverage gap. Closing the gap could inject roughly $2 billion in federal money per year into Virginia, help as many as 400,000 low-paid Virginians get the medical care they need to be healthy and productive, and protect vital services from cuts by saving the state hundreds of millions of dollars.

In the budget year that closed at the end of June, the state collected $266 million less than expected. As a result, the much needed pay raises for teachers and state employees slated to take effect later this year are on hold. And now, after reviewing what the state expects to collect this budget year and next, Governor McAuliffe and legislative leaders are raising concerns about future revenues.  

But if lawmakers had agreed to close the coverage gap in conjunction with a provider assessment starting in January 2017, the state could have saved as much as $352 million between this budget year and next. That’s because Virginia pays for a wide range of services for uninsured people with state dollars. For example, the state helps to offset care for the poor at the health systems run by UVA and VCU. Closing the coverage gap would mean that many people without insurance would gain coverage, greatly reducing the hospital systems’ uncompensated care and the need for state help. The state could also save millions of dollars by using federal funds in lieu of state dollars to pay for inmates’ hospital care, cancer screenings, and temporary detention orders.

That kind of savings could take some of the sting out of the anticipated anemic state revenue growth and cuts to vital services. And closing the coverage gap could also provide an economic boost precisely when lawmakers are concerned about the lack of good-paying jobs. Injecting roughly $2 billion into the health care sector could support an average of 15,700 jobs with a salary of $60,000 plus benefits. Those additional health care jobs could then translate into over $68 million in state revenues each year.

Capturing these benefits requires state lawmakers to move forward with expanding Medicaid and to partner with the state’s hospital systems to ensure that the program is sustainable. Fortunately, 31 states and Washington, D.C. have expanded their Medicaid programs and are demonstrating that it does in fact save states money, increase access to health coverage, and reduce hospitals’ uncompensated care. In return, Virginia’s hospitals have openly acknowledged that they could be willing to contribute to the financial sustainability of Medicaid expansion in Virginia through a provider assessment.

Time after time lawmakers have been presented with the opportunity to do what is best for the state and their constituents. This would be a good time to seize the chance.

Health Care

Massey Whorley

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