The Supreme Court’s ruling a month ago on the ACA led to the predictable reactions from “the usual suspects” posing as Virginia’s political elite, especially those who quickly disclaimed any interest in the new Federal funds.
One thing is obvious:
The Assembly has a massive task ahead in terms of getting a grip on Medicaid, which is a Federal program that provides funds to states for medical benefits to the indigent and disabled. Let’s have a quick primer:
To date, Virginia has had one of the stingiest Medicaid programs in the nation, both in terms of benefits and eligibility.
From a public policy perspective, that has advantages in that pushes recipients to find work and private health care. (Children are a separate subject; more on that later). However, as the Medicaid program expands and become a de facto “single payer” health system, Virginia stands to lose billions of dollars in tax revenue — which we pay in Federal taxes and don’t receive in benefits.
A few fun facts …
Virginia ranks 12th in the U.S. in terms of population and 8th in terms of per capita income. There’s a lot of us and we are comparatively affluent. (This is a statewide average — there are obviously disparities across the Commonwealth).
We rank 22nd in terms of raw number of Medicaid recipients: slightly over a million strong. Virginia and New Hampshire are the only East Coast states with under 13% of our population on Medicaid. Our per capita percentage puts us 48th overall.
In other words, we have the strictest criteria to qualify for Medicaid.
Even then, our Medicaid spending is on track to triple since 2000, when the program had 500,000 recipients receiving $2.6 billion. There are many reasons for this: the first is economic (recessions drive Medicaid growth for obvious reasons); the second is the intentional expansion of the FAMIS program during the Warner administration (we enrolled every child in an eligible family, i.e. making 133% of the Federal Poverty Level, even if the parents didn’t qualify)
The latter is actually a good thing, since children have no choice in their economic circumstances and are comparatively inexpensive to insure (average Medicaid cost per child is only $2200 vs. $3500 for adults). So we can all agree that FAMIS was a success.
The ACA completely redefines Medicaid by making it a de facto ”single payer” of health insurance for all citizens, including healthy adults, who lack private insurance and have incomes within 133% of the FPL. That’s projected to be 270,000-425,000 new enrollees in Virginia.
Under the Federal law, these new annual payments (which range up to $4 billion), will be 100% absorbed by the Federal government through 2016 — although Virginia will still administer this state program.
The Federal match (or “FMAP”) will then begin to draw down in 2017, so that the state picks up 10% of the new cost. The state will continue to pick up the cost of the enrollees under the old system, as well as the administrative costs for running Medicaid.
Of course, ACA is a law. Like any law, it can be rewritten by a new Congress, perhaps one more concerned with cost-cutting and less concerned with keeping a promise.
Having said all that, any Governor that refuses to participate in ACA — or declines the Federal share — will be walking away from $2 billion annually in health care benefits to its citizens. Notably, these are benefits which are subsidized by the Federal taxpayer (or the Federal bondholder to be more accurate). No, you don’t get a tax refund if your Governor refuses these benefits. It’s just a dead weight loss.
It’s akin to refusing an inheritance because you don’t like the person who gave you the gift. I guess you make a point. But does anyone really care?
At the end of the day, state legislatures have to fight their own battles – not refight battles lost on Capitol Hill. That is what Federalism is really about.
If you oppose ACA as “government creep,” then by all means elect a Congress or President that will change it. By contrast, refusing FMAP is a surefire loser — and the state taxpayer won’t stand for it.