By Julian Walker
More than 750,000 low-income Virginians depend on it to stay healthy. It
costs more than the state's college system and prisons. And signs are that
Virginia's Medicaid program is only going to grow even more, thanks to the
federal health care overhaul and other trends.
Republicans, Democrats and health care industry leaders all agree that
paying for the growth in Medicaid is a challenge.
Over the years, Medicaid spending has markedly increased in Virginia.
It was about 5 percent of the state general fund budget in 1985. Soon it
will be nearly 20 percent, or about $3 billion, second only to public
"This already out-of-control, unsustainable level of increase in Medicaid
funding... has got to be arrested," Gov. Bob McDonnell said recently. "We
cannot continue to sustain the same level of funding in the Medicaid
Medicaid pays for medical care for certain infants and children, pregnant
women, elderly people and physically or mentally disabled adults who meet
It's a partnership between the state and federal government, which each bear
roughly half of the financial burden.
During the recent economic downturn, stimulus money covered a larger portion
of the split with states because Medicaid enrollment tends to increase when
more people are out of work. An extension of that temporary aid - Virginia's
projected share is $417 million - is pending in Congress. Of that sum, $165
million must be spent to undo cuts to Medicaid in the two-year state budget,
As the federal health care overhaul begins to take effect, more people will
qualify for Medicaid - that's one way of extending coverage to millions of
In Virginia, those mandates mean expanded eligibility for low-income elderly
and disabled people as well as certain other adults, including some who
historically haven't been eligible, according to Dr. William Hazel Jr.,
Virginia's Health and Human Resources secretary.
Even though the federal government is expected pay the lion's share of
Medicaid expenses under the health care overhaul, Virginia will see higher
costs as well. Between 2014 and 2022, the additional state costs are
estimated to be $1.5 billion.
Hazel has said Virginia's Medicaid rolls could grow by 270,000 to 425,000
recipients in the coming years under the new requirements.
Virginia now ranks 48th among the states in per capita spending on Medicaid.
Part of the problem is that the state has spent so little, it now has
further to go to expand coverage, said Del. Bob Brink, an Arlington
State officials point out that the program has been ranked as one of the mo
st efficient in the nation. And because Virginia doesn't pay for as many
services as other states, it hasn't had to eliminate as many programs during
this spring's budget-balancing process.
Nonetheless, the state cut the amount that some health care providers will
be paid for treating Medicaid patients.
For doctors, dentists and other medical professionals, those cuts are tough
to absorb because Medicaid reimbursements already don't cover the full cost
of services, said Norfolk Democratic state Sen. Ralph Northam, a physician.
"We need to be careful not to cut our reimbursements so much that people
stop taking Medicaid," he said.
When that happens, some Medicaid patients go to a hospital emergency room
for care if they can't find a doctor to treat them, a more costly approach
for the state and providers.
Unlike doctors, hospitals and other health care facilities don't have the
option to decline to treat Medicaid recipients, said Katharine Webb, senior
vice president of the Virginia Hospital and Health Care Association.
One possible alternative proposed by McDonnell, a Republican, is to seek
federal authorization for a comprehensive managed-care program in the state.
He submitted a budget amendment with that aim this year, saying it would
reduce costs through regular, preventative care rather than expensive
emergency room visits.
But the legislature rejected it amid concerns from some health advocates
worried that the quality of care would suffer and that some of the limited
money would be siphoned away by administrative costs.
While increased Medicaid expenses are a looming concern, it isn't the only
issue state leaders face under the new health care law.
As an employer, government must determine how the federal package will
affect its work force and prepare for other costs associated with the
McDonnell has assigned that task to Hazel, whose office will oversee
preparations for the transition.
In the meantime, Virginia Attorney General Ken Cuccinelli is proceeding with
his challenge of the federal legislation, arguing that it conflicts with a
new state law and is a congressional overreach.
The governor supports that effort and has signed into law a statute
exempting Virginians from the individual insurance mandate in the federal
health care bill.
Partisan divisions aside, there is near universal agreement on this:
Mushrooming Medicaid costs must be addressed.
"We're all in this together," Webb said. "And everybody's going to have to
figure out a better way to deliver services to this population so we can
both get our arms around the cost and make sure we don't do any damage to
the quality of care."