Thursday, February 28, 2013

Bill Stanley: Medicaid Expansion

From Virginia State Senator Bill Stanley:

Medicaid Expansion

February 25, 2013

From the office of Senator Bill Stanley


Phil Rapp, Communications Director

(o) 804-698-7520

Medicaid expansion was a major topic for the General Assembly this year. The original bill, SB 1329, which was designed to expand the class of Medicaid recipients in Virginia to include those meeting the criteria in the federal Patient Protection and Affordable Care Act until such time that the federal subsidy back to the state is reduced below 90%,  had been withdrawn by the sponsor.  The Medicaid expansion issue was placed into the hands of the Senate and House of Delegates Conference Committee where a compromise budget amendment was approved by both houses and included in the 2012-2014 Biennial Budget that was sent to the Governor for his signature on this past Saturday.  I voted against the Biennial Budget because of the Medicaid Expansion language and the financial burden this program will place on the taxpayers of Virginia.

Make no mistake, an expansion of the state’s Medicaid program carries with it a price tag, a very large price tag.  Our country is slowly drowning in a sea of red ink.  Expanding the Medicaid program in Virginia on a promise from the federal government to continually subsidize the program would certainly be foolhardy. We need to be realistic about committing to yet another high cost entitlement program before we jump into this quicksand of more unsustainable debt.

I am very aware of the struggles that too many Virginians in our area are experiencing whenit comes to healthcare. I also remain very concerned about the future cost impact that the proposed Medicaid expansion would mean to the taxpayers in the Commonwealth.  I firmly believe that it is necessary for those who are truly in need to have access to a safety net of quality healthcare. 

Further, many of our district citizens are employed by the healthcare industry. Certainly, the infusion of 9.9 billion dollars of federal money will result in more jobs as well as greater job security in the healthcare industry in our area, and many healthcare delivery professionals and facilities would directly benefit from such an expansion in Medicaid benefits. However, I remain very skeptical of the long term costs that would eventually become a major unsustainable spending issue for Virginia tax payers in the near future.

As it stands now, even without the Medicaid expansion, Virginia’s financial obligation for its part of Medicaid cost takes up over 21% of the total state budget. Simply put, the state’s budget for 2013 is $7.6 billion dollars in Medicaid payments, serving on average 870 thousand claimants each month.

The lure of the Federal government’s offer to subsidize 100% a Medicaid expansion in Virginia for the next three years, followed by a 90% subsidy rate in subsequent two years (for a total of nearly 10 billion dollars) is very enticing for the state to join in but there are no guarantees that the Federal government will actually be able to provide this level of support even beyond the first three years. 

It is the lure of “free money” that makes it so attractive on the surface; but, we know that there is no such thing.

 For example, if by 2017 the Federal government decides that the promised 90% subsidy is just too much to send to the Commonwealth and decides instead to reduce the reimbursement amount to a 50% level, the state stands to be on the hook for an additional 551 million dollars per year.  This amount will balloon to a total burden of 7.9 billion dollars upon the Virginia tax payer for the five year period ending in 2022.  This is totally unsustainable for the tax payers of Virginia to support.  Without major cuts and/or tax increases elsewhere in the budget, this program would be bankrupt within five years.

It’s time to admit that we cannot just keep adding entitlement programs with huge price tags in the hope that somehow, someway these programs will be paid for by the tax payers.  Adding program after program only to have the tax payers face yet more unsustainable funding obligations created by the federal government is irresponsible and must stop.

 To be clear, the hook that the Federal government uses is its argument in strong-arming the states to comply with the voluntary Medicaid expansion is that it will extract the billions of dollars from our state through the burdensome tax system created in the Affordable Care Act (otherwise known as “Obamacare”), and will take that money and give it to other participating states if Virginia chooses not to participate. This is patently unfair, yet it is the reason why we see most states are giving in to the federal government.

 The Federal government is borrowing on the order of 44 cents of every dollar it spends as we speak, and is 17 trillion dollars in debt, and growing every day. Virginia cannot cash the checks that the Federal government is writing, nor can Virginia count on the federal government to keep its promises to subsidize Medicaid where it can’t even keep its fiscal house in order.  

 It is also unwise from my view point that the taxpayers of Virginia should rely on even a 50% subsidy rate from the Federal Government by 2017.  I consider the Federal government’s proposed Medicaid expansion plan to be nothing more than a potential “bait and switch” that will leave us and any other state that buys into this plan to eventually be left holding the bag, and one that Virginia cannot afford in the long term. 

 I recognize that a plan to expand Medicaid is necessary, but not by just throwing tax payer dollars at it – instead, we need to re-visit the entire Medicaid system and make the necessary plan design changes and reforms before we commit to yet another unsustainable entitlement cost on Virginia taxpayers. 

 A “quick-fix” from the General Assembly to relent to federal government pressure and expand Medicaid in the Commonwealth under certain conditions, while a noble effort, still does not cure the federal government’s spending and overall inefficiency problem. If this incredible financial burden is passed on by the government to you and me, after five years it could surely threaten Virginia’s ability to pay for our roads, schools, public safety and other essential core services of government in the future.  As a result, I voted against the 2012-2014 Biennial Budget as I believe the Medicaid Expansion program provisions will only result in an immeasurable financial burden for the Commonwealth.