RTD Exclusive: The firewall against Medicaid expansion has fallen in the Virginia House of Delegates, budget proposal shows

February 18, 2018

The firewall against Medicaid expansion has fallen in the Virginia House of Delegates.

The House Appropriations Committee on Sunday will consider a proposed two-year budget that includes extending Medicaid coverage to more than 300,000 uninsured Virginians under the Affordable Care Act and using the savings to pay for a blockbuster higher education initiative in Northern Virginia, a big infusion of cash into K-12 and early childhood programs, and a targeted expansion of raises for public employees.

The proposed budget represents a dramatic political turnaround by the House, as new House Speaker Kirk Cox, R-Colonial Heights, and newly inaugurated Democratic Gov. Ralph Northam unveiled what would be their biggest bipartisan accomplishment on an issue that has starkly divided the General Assembly for more than four years.

 “My long-standing concerns about the cost of expansion aren’t going away, but unfortunately the ACA is here to stay and the Trump administration is the best chance to secure conservative reforms,” Cox said in a statement to the Richmond Times-Dispatch on Saturday, the eve of the annual release of the House and Senate budget proposals.

“Instead of fighting a losing battle against straightforward Medicaid expansion, I believe the House should lead by putting forward a responsible plan similar to what Vice President Mike Pence adopted as governor of Indiana,” said the speaker, referring to federal approval this month of a work requirement for the Indiana Medicaid program that Pence expanded with reforms in 2015.

Northam spokesman Brian Coy said in response to questions about the House proposal, “The governor supports the concept of expanding coverage to Virginians who need it and offering training and incentives to connect people with work opportunities.”

“We will analyze the final language when we see it and look forward to reaching a solution that works for all Virginians,” Coy said.

The House proposal sets the stage for a political showdown over the next three weeks with the Senate Finance Committee, which already has said it will not include full Medicaid expansion in the budget it will propose later on Sunday, leaving a gulf of almost $400 million between the two spending plans.

The proposed House plan would accept $3.2 billion in federal money to pay for 90 percent of the cost of expanding the program on Jan. 1, 2019, while relying on a new “provider assessment” on hospital revenues to cover the state’s share of the cost of health coverage for currently uninsured Virginians whose care is uncompensated.

“This would include a mechanism to true up costs to ensure that hospitals are only paying for the expanded population,” House Appropriations Chairman Chris Jones, R-Suffolk, said in an interview Saturday.

Jones acknowledged the proposal faces opposition from some Republicans on his committee and in the House, where the GOP holds a 51-49 majority after losing 15 seats in November.

“We always try to be balanced on this committee, and we’ve put together an approach on health care that recognizes reality in both Washington and Virginia,” he said. “While there are concerns about cost, I firmly believe our plan takes steps to protect the taxpayer and existing programs, while still finding a path forward to help low-income Virginians who need health care coverage.”

“When you put this together with our overall budget, I truly believe we are responsibly leading in a fiscally prudent manner, as we have consistently done over the past decade,” he said.

Dual track

The plan proposes a dual track for federal approval. The state would seek approval of an amendment to its state Medicaid plan to expand eligibility, while acting immediately under new language in the current budget to request a federal waiver to allow a requirement for Medicaid recipients to engage in some form of work, study or training, as well as other conditions for receiving health benefits.

It includes $22.4 million to administer the “Training, Education, Employment and Opportunity Program” the House adopted this month to impose work-related conditions on “able-bodied, working-age adults” who receive Medicaid benefits. The House approach is modeled after the Medicaid work requirement imposed in Kentucky and Indiana with the approval of the Trump administration.

Although Democrats have opposed a work requirement on Medicaid recipients, they helped pass the legislation proposed by Del. Jason Miyares, R-Virginia Beach, and rewritten by House leadership.\

“I am very appreciative of the governor, the speaker and Chairman Jones for the work they have done to ensure more Virginians receive coverage,” said Del. Luke Torian, D-Prince William, the top-ranked Democrat on the Appropriations Committee.

Del. Mark Sickles, D-Fairfax, who serves on the Appropriations health and human resources subcommittee, said Saturday that he “could feel it coming” during the first half of the legislative session. “I’m very happy it’s come to fruition,” Sickles said. “I look forward to moving it the rest of the way through the process.”

The House proposal would launch the expansion three months later than under the budget then-Gov. Terry McAuliffe proposed last year, so the projected savings would be about $50 million less than the $421.7 million estimated in the governor’s proposed $115 billion biennial budget.

Much of the savings would come from using federal dollars to replace state money now paying half the cost of Medicaid services for people with mental illness or substance use disorders, as well as pregnant women and prison inmates who require hospital care. The state also would save general fund dollars now used to subsidize hospitals for uncompensated care of the uninsured.

Pay raises

Some of the projected budget savings would go to raises for state and other public employees, with targeted pay increases for sheriff’s deputies, officers in adult and juvenile correctional facilities, and nurses and direct-care staff in state mental hospitals.

Raises of 2 percent for state employees and teachers that had been slated to take effect on Dec. 1, 2019, under McAuliffe’s budget proposal would be moved up to July 1, 2019, under the House plan, with an additional 1 percent in merit pay increases available for state workers.

Deputies with law-enforcement duties each would receive a $1,000 pay increase next January, in addition to a 2 percent raise for state-supported local employees at the beginning of the second year. Officers in adult and juvenile correctional facilities also would receive targeted pay increases of about $1,100 in the first year, as well as raises of up to 3 percent for all state employees in the second year.

Public education

Other savings would go to public education, with more than $69 million in additional Virginia Lottery proceeds for K-12 school districts to spend as they see fit without a requirement of local matching money, and $5 million for state preschool initiatives, including a statewide requirement for assessing children’s readiness for kindergarten.

It also would expand recent state initiatives in mental health by providing money for six additional secure assessment centers to allow law enforcement to drop off people experiencing psychiatric crises to determine whether they require further involuntary detention and treatment. The proposed budget includes almost $18 million over two years in targeted raises for nurses and direct-care staff at state mental hospitals to close the gap with the median market pay for such high-turnover jobs.

CyberX

Perhaps the biggest surprise of the proposed House budget is a plan to spend $40 million in the second year to establish the CyberX program in Northern Virginia. The ambitious initiative would be led by Virginia Tech to push higher education research and master’s degree programs for cybersecurity, data analysis and computer science, and unmanned vehicle systems in partnership with those growing high-tech industries.

The CyberX plan would establish a research and educational institute in leased facilities in Tysons Corner in Fairfax County that would serve as the hub of a new program connecting the “spokes” of research colleges and universities across the state — the University of Virginia, Old Dominion, George Mason, James Madison, Norfolk State and several community colleges federally certified for their cybersecurity programs.

The program would offer a five-year plan spanning three years of undergraduate study, a year of internship, and a year of master’s work in sought-after fields.

The plan envisions an additional $50 million in privately raised money to help recruit top researchers who would hold dual appointments for CyberX and their respective higher education institutions, which also would pay a share of the cost. The proposed budget also includes $10 million in unused state capital funding to equip the new institute.

The proposal grew from extended conversations among Jones, Appropriations Director Robert Vaughn and Virginia Tech President Tim Sands, as well as experience from similar industry-higher education partnerships at the Virginia Tech Carilion Research Institute in Roanoke, the Inova Center for Personalized Health in Fairfax, and the Commonwealth Center for Advanced Manufacturing in Prince George County.

It would be overseen by the Virginia Research Investment Committee established two years ago to support higher education research with strong commercial potential and administered by the State Council of Higher Education for Virginia.

Degree initiative

SCHEV also would be required to monitor a separate, proposed budget initiative to invest more than $42 million to fund 880 degrees at four-year institutions in high-demand fields — science and engineering, health care, education and teaching, and data science.

Both higher education proposals are part of a widely supported push for workforce development that includes educational investments from preschool through secondary institutions, including community colleges, to prepare young Virginians with the skills needed for high-wage jobs, especially in high-tech industries.

The House budget proposal also includes $15 million in additional funding for GO Virginia, a business-led initiative to support economic development in regions across the state, and $5 million for the Virginia Economic Development Partnership that the state reformed and rejuvenated last year after a scathing assessment by the Joint Legislative Audit and Review Commission in late 2016.

Cash reserve

Not all of the projected savings would be spent under the budget, which calls for $90 million to be deposited in a new cash reserve over two years on top of the $156 million already designated for the fund. The commitment would raise the fund to almost $250 million, or more than halfway to the goal of reserving 2 percent of general fund budget revenues to allay concerns a national bond-rating agency expressed last year over the state’s fiscal outlook.

But all of it ultimately relies on the decision to approve a two-track expansion of Medicaid that would depend on the federal government supplying at least 90 percent of the money to pay for it.

“It’s a great day for our low-income Virginians,” Sickles said. “I am positive it is going to have good health outcomes and good fiscal outcomes over the long term.”