Research & Commentary: Virginia Should Oppose McAuliffe Medicaid Expansion Plans

Published November 19, 2015

The Affordable Care Act (ACA), also known as Obamacare, allows states to expand Medicaid to cover individuals making up to 133 percent of the federal poverty level. Thirty states and the District of Columbia have chosen to expand their Medicaid programs under the ACA, and 20 states, including Virginia, have refused to do so.

Gov. Terry McAuliffe’s (D) previous attempt at Medicaid expansion, Marketplace Virginia, emulated Arkansas’ premium assistance model, but it failed to pass in 2014. Marketplace Virginia would have expanded Medicaid to cover uninsured people earning up to 138 percent of the federal poverty level and use $1.7 billion a year in federal taxes collected in the state under the Obamacare law to purchase private health insurance for the newly eligible individuals.

McAuliffe told The Washington Post he will craft a plan conservatives will support to extend health care benefits to 400,000 uninsured citizens at no cost to the state. McAuliffe did not give any concrete details about his plan. Republican leaders speculated his new proposal would center on the creation of a bed or provider tax. The Washington Post noted a similar proposal was discussed by Virginia’s Provider Assessment Work Group, which examined the possibility of charging hospitals a new tax of 1–3 percent of gross revenues to fund Medicaid expansion. Peter Ferrara, a senior fellow of The Heartland Institute, warns total future costs to state governments for Medicaid expansion are estimated to exceed the costs picked up by the federal government by an additional 66 percent.

It is important to note any plan generated by McAuliffe would require legislative approval to enact. This check on the governor’s power was added during the previous legislative session, after concerns arose he might impose Medicaid expansion unilaterally.

Such programs still represent an expansion of the failed Medicaid system, in which multiple aspects of the insurance plan are dictated by the federal government and the beneficial elements of real market competition are lost. Although some of the “private insurance” models proposed by the states include more substantive reforms, such as copays and employment requirements, the Centers for Medicare and Medicaid Services (CMS) have largely rejected those proposals. The waiver process under which these proposals would be implemented is expensive, slow, and arbitrary. There is no guarantee any waiver would be granted or renewed down the road.

Medicaid is an expensive program that provides very poor quality care, yet health care providers and employers continue to push states to expand the program. Instead of expanding a flawed model that is unnecessarily costly, delivers subpar health care, and shifts more power to the national government, state lawmakers should focus on reform options, such as Florida’s Medicaid Cure, which reduce costs and offer better care.

Virginia legislators should continue to resist Medicaid expansion and instead reform their fiscally unsustainable program in ways that provide better care to enrollees and offer lower costs for taxpayers.

The following documents provide additional information about state Medicaid reform.

Ten Principles of 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
In this Research & Commentary, Heartland Institute Senior Policy Analyst Matthew Glans argues Medicaid expansion in Virginia is an expensive endeavor the state may not be able to afford.  

The Battle Over Medicaid Expansion
Ben Domenech covers the Medicaid expansion debate, including in Virginia. “There is no justifiable case to be made for accepting the Obamacare Medicaid expansion at this juncture as a fiscal conservative,” Domenech wrote. “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
Nicole Kaeding of the Cato Institute argues against the proposed Medicaid expansion in Virginia, 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
Examining the Arkansas Medicaid expansion model, Matthew Glans of The Heartland Institute argues state lawmakers should instead consider reform options that reduce costs and offer better care to patients in the current system, similar to the system being tried in Florida.  

A Cure for What Ails Us: State-Led Healthcare Solutions to Fix Washington’s 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
Kendall Antekeier of The Heartland Institute explains why states should avoid Medicaid expansion and instead reform this fiscally unsustainable program in ways offering better care at lower costs to taxpayers.  

Research & Commentary: The Medicaid ‘Cure’
Kendall Antekeier examines the Medicaid Cure, a pilot program established in five large Florida counties, that 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
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
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
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, DC 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, The Heartland Institute’s website at, and PolicyBot, Heartland’s free online research database at  

If you have any questions about this issue or The Heartland Institute’s website, contact Heartland Institute Government Relations Director John Nothdurft at [email protected] or 312/377-4000.