by James A. Baco

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Predictably, Governor Bob McDonnell is taking flak for refusing to agree to an expansion of Virginia’s Medicaid program without significant assurances and concessions from the Obama administration. What I haven’t seen yet is a critique of his reasons for doing so. Name calling and disparaging motives doesn’t count. In a letter sent yesterday to Kathleen Sebelius, secretary of Health and Human Services, he made a persuasive case. If critics want to bash McDonnell, let them address the substantive issues.

The current Medicaid plan consumes 21% of Virginia’s General Fund budget, up from 5% three decades ago, the governor wrote. “This explosive 1600% growth in Medicaid spending in the past 3 decades, combined with the federal government’s unsustainable nearly $17 trillion national debt, makes Medicaid expansion cost prohibitive.”

It is unwise to expand Medicaid without “dramatic verifiable cost saving reforms of the program at the state and federal level,” McDonnell said. Virginia cannot proceed without statutory and regulatory flexibility and waivers, private-sector cost containment reforms and other tools to address Medicaid spending growth. In an attachment to the letter, the governor advanced five “tenets” of Medicaid reform.

• Deliver all Medicaid services through an efficient, market-based delivery system. That means implementing a commercial-like benefit package for adult Medicaid beneficiaries, enrolling more people in managed care programs, and tightening enrollment standards and provider qualifications.
• Establish provisions to reduce financial burdens to Virginia. This language is totally justified, although it might be a tad difficult for the Obama administration to swallow: “Obtain reasonable assurance from the federal government that a Virginia Medicaid expansion will not contribute to a future increase in the national debt. Virginia cannot participate in an expansion that will increase the financial burden on future generations of Americans.” McDonnell also wants “reasonable assurance” that the federal government will “implement a long-term path to financial solvency that can cover the ongoing cost of an expansion.”
• Maximize tools currently available to the commonwealth … to achieve administrative efficiency. The key words here are “streamline, “reform” and “consolidate administrative authority.”
• Achieve greater flexibility by pressing Congress to amend the Patient Protection and Affordable Care Act. Virginia wants to drive behavior through value-based purchasing and by restructuring benefit and service-delivery design.
• Implement broad-based, long-term, statewide reform. McDonnell wants to reform Virginia’s health-care system to reduce the cost of all medical care and long-term care services, reducing Virginia’s Medicaid expenditures while strengthening Virginia’s entire healthcare market.

Bacon’s bottom line:

The devil is in the details, of course, but McDonnell is absolutely on the right track. This letter almost persuades me to forgive him for pushing his transportation-funding bill, which doesn’t reform anything (except how we raise money) about the way we approach transportation and land use. If he would put as much political capital behind health care reform as he did behind his transportation bill, he just might redeem himself among conservatives.