Supreme Court decision on healthcare means new challenges for Virginia
August 6, 2012
While most Americans concerned about healthcare have been focused on the Supreme Court and the U.S. Congress, there are critical decisions that need to be made by Virginia in the aftermath of the Supreme Court’s decision to uphold the federal law. First, Virginia needs to decide whether we wish to create a marketplace for choice and competition in the healthcare plan arena. The federal law uses the term “health care exchange”, but a better phrase is the “Virginia Health Care Marketplace”. Second, we need to decide whether to extend coverage to more Virginians under the Medicaid program, primarily using federal dollars to do so. While these decisions are not easy, we should focus on them now, and not wait, as Governor McDonnell wants to do.
State insurance exchanges originated as a Republican idea to offer a menu of private insurance plans from which small businesses and individuals could choose. Under this approach, Virginians would be able to choose a plan of private insurance that is right for them. The exchanges would be designed to facilitate competition among private insurers and allow Virginians to compare the prices and products offered by those insurance companies.
Under the federal law, the exchanges can either be established by each individual state, or they can be imposed by the federal government. As of June 5, 2012, ten states and the District of Columbia had enacted legislation to establish state-based health insurance exchanges. Our Governor has dragged his feet, perhaps fearing that accepting any federal dollars to do health care reform will make him appear weak in the eyes of conservatives. But his failure to act leaves Virginians with fewer choices and creates the possibility that whatever exchange eventually develops will be controlled by Washington rather than Richmond. If you like competition and choice, you should advocate for the Virginia Healthcare Marketplace, and encourage the Governor to call a special session so that the marketplace can be established and controlled by Virginians.
The second issue facing the Commonwealth is whether we wish to extend Medicaid to almost 250,000 low and moderate income persons that do not presently qualify. While Medicaid is a healthcare program operated by the state, one-half of its funding comes as reimbursement from the federal government. Under the new federal law, for the first 3 years, the federal government will reimburse the state 100% of the cost of the proposed Medicaid expansion; after that, the percentage will gradually decline so that 10 years from now only 90% of the cost will be reimbursed. The 57th District includes 80,778 residents, 13% of which already receive Medicaid benefits. Of those beneficiaries, 58% are children, 4% are pregnant mothers, and 21% are elderly, blind, or disabled. States have the option of expanding their Medicaid program to all individuals with incomes up to 133% of the federal poverty level (present poverty threshold for a family of four is $23,050). According to the Kaiser Family Foundation, choosing this option will allow 245,840 uninsured Virginians to receive Medicaid coverage. This will help low income Virginians and likely reduce costs for large hospitals like U.Va., which presently “write off” many costs for indigent care. Those “write offs” show up as extra costs, either to the state, which provides hospitals with some reimbursement for indigent care, or in increasing premiums for those who already have health insurance.
It is projected that Virginia Medicaid spending would increase 1.8% from 2014 to 2019 if we extend coverage to more Virginians. The Governor’s Virginia Health Reform Initiative Advisory Council estimated that uncompensated costs for the uninsured presently amounts to $1.65 billion per year; the council found that the Medicaid expansion could reduce these costs by about half. Of the 50 states, Virginia’s Medicaid program ranks 48th in the country in per capita benefits, primarily because the eligibility thresholds exclude most working-age adults from coverage. Beyond that, our Medicaid reimbursement rates for hospitals and doctors are among the worst in the country and are seemingly cut every year. While it is true that Medicaid expenditures consume an increasing percentage of the state budget, and certain reforms are necessary to get some of the costs under control, the issue of whether to take federal monies to assist thousands of Virginians with healthcare costs is a debate that we need to be having – and having now.
As always, it is an honor to represent you in the General Assembly. I encourage you to let me know your thoughts and concerns about how we are doing as a Commonwealth.
Sincerely,
David
