The Health Insurance Hubbub in Virginia

Posted on Mar 08, 2013 by Ailee Slater (G+)

Nothing demonstrates the politicization of health care reform quite like a strongly worded letter. One letter of particular interest this week was sent from Virginia Governor Bob McDonnell to the United States Secretary of Health and Human Services. What was so important that Governor McDonnell couldn't just pick up the phone and have a private conversation? Governor McDonnell wanted to tell Secretary Kathleen Sebelius, along with media outlets and his fellow members of the Republican party, that the state of Virginia was totally, completely and absolutely not approving Medicaid expansion.

When the Affordable Care Act was first passed, it mandated that all states expand their Medicaid programs to include anyone with an income of up to 133 percent of the federal poverty level. In Virginia, this would mean adding an additional 400,000 people to the state's Medicaid program. However, the U.S. Supreme Court ruled last year that it is unconstitutional to force states to expand Medicaid. Because of this court ruling, states can make the Medicaid expansion decision all on their own. Many states, such as California, Colorado and Arkansas, have decided in favor of expansion, taking advantage of federal financial incentives to do so - after all, the federal government is offering to cover 100 percent of the cost of all new Medicaid enrollees during their first three years, and 90 percent of costs after that. However plenty of states, such as Alabama and Idaho, have vehemently refused to expand.

Until this week, it looked like Virginia was on its way to accepting a Medicaid expansion plan. This is because recent budget negotiations in Virginia led Governor McDonnell to approve a budget amendment that did not exactly give a green light to Medicaid expansion, but didn't rule it out in the future. What's more, another part of the Virginia budget amendments created a series of reforms to be instituted to the state's Medicaid system, with the understanding that after these reforms are complete, a full Medicaid expansion might occur. Now, Governor McDonnell says that these moves toward Medicaid reform have been misinterpreted by politicians and the media as a sign that Virginia will be instituting the federal Medicaid expansion.

According to McDonnell, this is just plain wrong. In his strongly worded letter to the Secretary of Health and Human Services Kathleen Sebelius, McDonnell writes: "The recently passed budget of Virginia contains language outlining a series of reforms that must be completed½prior to      consideration of Medicaid expansion. Some media outlets and elected officials have labeled this as approving Medicaid expansion in Virginia. This is absolutely incorrect." McDonnell is eager that his budget work not be misinterpreted, because advocating a Medicaid expansion might send the wrong message to Republican compatriots. As a politician whose name has been mentioned in connection with a 2016 presidential run, McDonnell wants to leave no room for criticism that his state's health insurance policy in any way advocates Obamacare. Indeed, in his letter to Secretary Sebelius, McDonnell included much harsh language in response to the federal government meddling in health insurance policy: "I continue to be strongly opposed to many of the policies in the Patient Protection and Affordable Care Act½The federal mandates, regulations, taxes and spending create an expensive, top-down bureaucratic system is (sic) not the way to improve access, reduce costs, and facilitate innovation in America's internationally respected medical care system." Future Medicaid expansion in Virginia, therefore, relies almost entirely upon the success of the state's proposed Medicaid reforms.

Only once those reforms are in place will pro-expansion politicians have the chance to accept federal support and get more of the state's population on Medicaid. The first tenet of necessary Medicaid reform involves more efficient delivery of Medicaid services. This would include making benefits packages more commercial, better coordinating the delivery of different types of care, and implementing a new eligibility and enrollment system. Tenet two of Medicaid reform for Virginia is all about money. To complete this aspect of reform, lawmakers must receive reasonable assurances from the federal government that if federal funds are used to support new Medicaid enrollees, this will not negatively affect the national debt. Like other states, Virginia also wants assurance that the federal government will not back out of their promise to continue supporting new Medicaid enrollees at a rate of 90 percent after the first three years.

Financial reform of Medicaid in Virginia should also include better resources and data to fight insurance fraud. The third tenet of the Virginia Medicaid reforms seeks to improve the efficiency of insurance and health care administration. For example, authority would be consolidated amongst primary and long term care services, as well as between the state's six home and community based waiver programs. Fourthly, the reform plan argues that Virginia should work to have more flexibility in insurance law than what is currently granted under the Affordable Care Act. Virginia wants the right to require Medicaid beneficiaries to engage in preventative services such as having an annual physical exam, in order to remain on the Medicaid program. Although federal law requires that Medicaid pay for ambulatory services, Virginia would like the right to only provide non-emergency transportation in the case of a potentially life-threatening condition.

Finally, the fifth Medicaid reform will get health care stakeholders more involved in the implementation of these reforms; the hope being that with such investments from stakeholders, Medicaid expenditures can be reduced. It all seems like quite a lot of work; no wonder Governor McDonnell is quick to point out achieving these reforms and opening up the possibility of federal Medicaid expansion is in no way a certainty. Potentially the strangest aspect of all of this (the letter, the heavy-handed reforms and the political squabbling over Obamacare) is the fact that the Virginia budget expires in July 2014. By that time, a new governor will have been elected, and he or she may choose to entirely do away with McDonnell's proposed reforms. For the hundreds of thousands of Virginia residents interested in joining a public health plan, the chance that a new governor will approve federal Medicaid expansion within the state is certainly exciting.