Virginia’s Medicaid program, though one of the most frugal in the country, still has waste and inefficiency.
John M. O’Bannon III, R-Henrico, is a neurologist, and his medical practice provides care to indigent patients with little hope of paying their bills, but he is also a Republican delegate to the General Assembly. When he contemplates an expansion of Medicaid, a top priority of incoming Governor Terry McAuliffe, he is very concerned about the fiscal impact on Virginia.
“Medicaid is the fastest growing part of the state budget,” O’Bannon told Bacon’s Rebellion. The program, which is roughly half funded by the federal government and half by the state, gobbles up 40% of all new dollars in the General Fund budget submitted by outgoing Governor Bob McDonnell. “It’s crowding out education and public safety. We have a trajectory that’s unsustainable.”
O’Bannon is not dogmatically opposed to expanding Medicaid, as allowed for under the Affordable Care Act (Obamacare). But he belongs to the camp that says Medicaid must be reformed to bring down its cost structure before the state takes on the commitment in four years of covering 10% of the expense of extending the program to another 250,000 to 400,000 poor and near-poor Virginians.
If there’s a major point that has been lost in the debate over Virginia Medicaid expansion, it’s the linkage of Medicaid expansion to reform. The question is not, “Do we expand Medicaid, yes or no?” The question is, “Does Virginia use this once-in-a-generation opportunity to extract major concessions from the federal government in how Medicaid is administered before agreeing to expand the program?”
The Centers for Medicare & Medicaid Services (CMS) are negotiating with the states over how to implement the expansion, in some cases granting waivers for major reforms, says O’Bannon. Oregon is moving to a public health model, installing a totally new primary care system to take patients out of expensive emergency-room settings. Michigan is adopting a system that encourages Medicaid patients to take on more personal responsibility by making co-payments and getting more screenings. Arkansas is restructuring Medicaid to put more chronically ill patients on the program while subsidizing a shift of healthy poor patients to the health care exchanges. It’s classic laboratory-of-Democracy stuff, said O’Bannon, and Virginia can learn from the successes and failures in other states.
Meanwhile, Virginia has its own reforms that it wants to implement. One would be to change incentives to enroll so-called dual patients (who qualify for both Medicare and Medicaid) in managed care programs. Another would incentivize the use of nurse practitioners to head off infections that send nursing-home patients to the hospital. Others have criticized the Medicaid reimbursement of patient transportation costs on the grounds that the money could be spent more effectively in other ways.
There may be a lot of sound and fury in the General Assembly session as McAuliffe and like-minded legislators push for expansion, but O’Bannon doesn’t expect anything to come of it. Virginia is locked into a path that will be very difficult to dislodge it from. The decision whether or not to expand Medicaid currently rests with the Medicaid Innovation and Reform Commission (MIRC). Only if three out of five House and three out of five Senate members agree that Virginia’s demands for reform have been met can MIRC authorize the reforms and expansion. As currently constituted, three of the five Senate members and four of the five House members (including O’Bannon) are Republican.
Discussions with various interested parties are ongoing, and he’s open to talking to the other side, O’Bannon said. But he added: “Unless you can show us that this really will be a more efficient system and there won’t be a large outlying [fiscal] risk, you aren’t likely to see anything any time soon.”
In theory, the General Assembly can enact legislation to overturn the provisions of MIRC, but O’Bannon doesn’t see the Republican-dominated legislature doing that. There also has been discussion of winning over Republicans by packaging Medicaid expansion with elimination of the business-license tax, but he believes that any “grand bargain” would have too many moving parts to work out.
Medicaid expansion is the one opportunity that Virginia foes of Obamacare get to weigh in. “It’s a proxy for how people feel about Obamacare,” O’Bannon says, and he doesn’t see many Republicans capitulating. But he’s a pragmatist. Medicaid expansion would pump a lot of federal money into Virginia’s health care system and provide coverage for people who don’t now have it. If the state and the feds can come to terms over serious reform, he’ll vote for expansion. Absent reform, he’s opposed. “I’m not interested in just grabbing the money and running.”