Policy Documents

Research & Commentary: Virginia Should Require Legislative Approval for Medicaid Expansion

May 29, 2014

The Affordable Care Act (ACA) allows states to expand Medicaid to cover individuals making up to 133 percent of the federal poverty level. Currently, 26 states and Washington, DC are expanding their Medicaid systems, 19 are not expanding, and five are still debating the issue.

The debate over whether to expand Medicaid in Virginia is currently mired in a deadlock in the state legislature. Gov. Terry McAuliffe, a vocal advocate of Medicaid expansion, is now seeking to implement Medicaid expansion without the approval of the legislature. 

Expansion supporters argue the program amounts to “free money” because the federal government promises to pay 100 percent of the cost of covering people made newly eligible for Medicaid until 2016; the percentage phases down to 90 percent in 2020. They also say governors can implement expansion without legislative approval because expansion is funded without using state funds until 2016. 

Opponents of Medicaid expansion note the program is already stretching states thin financially and has a poor track record of providing cost-effective and efficient care for those in need.  Medicaid is currently the largest category of state spending: according to the National Association of State Budget Officers, Medicaid takes up 23.6 percent of state government expenditures. Given the impact of Medicaid spending on state budgets, it is inappropriate for any governor to bypass the legislature, as the latter is responsible for the budget and will be held accountable for future deficits. 

Without significant reforms, Medicaid will remain fiscally unsustainable. Contrary to expansion supporters’ depiction of the new federal funds as “free money,” Medicaid expansion is expensive, creating new costs the federal government may not always be able to cover, leaving state taxpayers on the hook for the new liabilities. There is much reasonable doubt that the federal government will be able to pay for the expansion in the long run. 

It is undemocratic to allow a governor the power to unilaterally expand the largest category of state budget expenditures. Ultimately, states that haven’t yet expanded Medicaid should require legislative approval for any future expansion. In April, Kansas and Tennessee passed laws preventing their governors from unilaterally expanding their states’ Medicaid programs, requiring legislative approval for any expansion. Such a requirement establishes the proper checks and balances of government and forces legislators to consider the wider implications of Medicaid expansion and how it would be implemented and funded in the long run. Virginia should follow the lead of Kansas and Tennessee and put the responsibility for Medicaid expansion where it belongs, in the hands of the legislature. 

The following articles examine in greater depth Medicaid expansion in Virginia and the Kansas and Tennessee proposals.

Ten Principles of Health Care Policy
http://heartland.org/policy-documents/ten-principles-health-care-policy
This pamphlet in The Heartland Institute’s Legislative Principles series describes the proper role of government in financing and delivering health care and provides reform suggestions to remedy current health care policy problems. 

Research & Commentary: Medicaid Expansion and Marketplace Virginia
http://heartland.org/policy-documents/research-commentary-medicaid-expansion-and-marketplace-virginia
In this Research & Commentary, Heartland Institute Senior Policy Analyst Matthew Glans argues Medicaid expansion is an expensive endeavor that the state may not be able to afford. 

McAuliffe Explores Whether He Can Expand Medicaid Coverage without Legislature’s Okay
http://www.washingtonpost.com/local/virginia-politics/mcauliffe-explores-whether-he-can-expand-medicaid-coverage-without-legislatures-okay/2014/05/01/8ff591f2-d090-11e3-b812-0c92213941f4_story.html
Laura Vozzella of the Washington Post reports on Virginia Gov. Terry McAuliffe’s efforts to expand Medicaid and notes he is considering expanding health coverage for the poor without the approval of the state legislature, “a move that would muscle his top priority past Republican opponents but also throw his young administration into a partisan firestorm and uncertain legal territory.”

The Battle Over Medicaid Expansion
http://news.heartland.org/newspaper-article/2014/03/19/battle-over-medicaid-expansion
Ben Domenech of The Heartland Institute covers the Medicaid expansion debate, including Virginia. “There is no justifiable case to be made for accepting the Obamacare Medicaid expansion at this juncture as a fiscal conservative,” Domenech writes. “The funds will not end up in another state if you deny them; you will be putting able-bodied adults ahead of the disabled in the line for care; and the federal government will put your state taxpayers on the hook for more tax dollars. There is no such thing as free money, and the strings attached to this ‘free money’ will be a problem for states for decades to come should these expansions go through.”

Medicaid Expansion Will Bust Virginia’s Budget
http://www.cato.org/publications/commentary/medicaid-expansion-will-bust-virginias-budget
Nicole Kaeding of the Cato Institute discusses the proposed Medicaid expansion in Virginia and argues against it, citing problems with coverage and funding: “Proponents will continue to promise states ‘free money’ to encourage them to expand Medicaid, but regardless of the rhetoric, Virginia policymakers should resist. It’s not only a bad idea; it’s fiscally irresponsible to expand this broken system.” 

Research & Commentary: Examining the Arkansas Medicaid Expansion Model
http://heartland.org/policy-documents/research-commentary-examining-arkansas-medicaid-expansion-model
Matthew Glans of The Heartland Institute examines the Arkansas Medicaid expansion model and argues state lawmakers should instead consider reform options that reduce costs and offer better care to patients in the current system, like the system being tried in Florida. 

A Cure for What Ails Us: State-Led Healthcare Solutions to Fix Washington’s Botches
http://heartland.org/policy-documents/cure-what-ails-us-state-led-healthcare-solutions-fix-washingtons-botches
This report from the Beacon Center of Tennessee outlines problems facing the health care system, offering in-depth policy discussions and recounting real-life experiences of Tennesseans who are already coping with and preparing for the effects of PPACA. 

Policy Tip Sheet: Medicaid Expansion
http://heartland.org/policy-documents/policy-tip-sheet-medicaid-expansion
Kendall Antekeier of The Heartland Institute explains why states should avoid Medicaid expansion and instead reform this fiscally unsustainable program in ways that offer better care at lower costs to taxpayers. 

Research & Commentary: The Medicaid ‘Cure’
https://heartland.org/policy-documents/research-commentary-medicaid-cure
Kendall Antekeier of The Heartland Institute examines the Medicaid Cure, a pilot program established in five large Florida counties, which uses a premium support model in which 290,000 Medicaid recipients are given a range of premiums and plans from which to choose. 

A Medicaid Cure: Florida’s Medicaid Reform Pilot
http://www.floridafga.org/2011/11/a-medicaid-cure-floridas-medicaid-reform-pilot/
The Foundation for Government Accountability provides insight into the success of the Florida Medicaid Cure: “When the patient is the priority, government and HMO bureaucrats are finally held accountable. Costs flatten and patient health and satisfaction improves.”

 

The Private Option: Medicaid Expansion by Another Name
http://heartland.org/policy-documents/private-option-medicaid-expansion-another-name
Nicole Kaeding of Americans for Prosperity provides a forecast of the effects of the decision to expand Medicaid in Arkansas. 

Why States Should Not Expand Medicaid
http://heartland.org/policy-documents/why-states-should-not-expand-medicaid
Writing for the Galen Institute, Grace-Marie Turner and Avik Roy outline 12 reasons states should not expand Medicaid and should instead demand from Washington greater control over spending to better fit coverage expansion with their states’ needs, resources, and budgets.

 

Nothing in this Research & Commentary is intended to influence the passage of legislation, and it does not necessarily represent the views of The Heartland Institute. For further information on this subject, visit Health Care News at http://news.heartland.org/health, The Heartland Institute’s website at http://heartland.org, and PolicyBot, Heartland’s free online research database at www.policybot.org. 

If you have any questions about this issue or the Heartland Institute Web site, contact Heartland Institute Government Relations Director John Nothdurft at jnothdurft@heartland.org or 312/377-4000.