Why Medicaid reform must come first

VA House GOP2013 General Assembly Session, Budget, Health Care, Issues


Published in the Richmond Times-Dispatch – Sunday, June 23, 2013

The legislative commission tasked with overseeing Medicaid reform met last week. This commission is responsible for implementing key reforms necessary before Virginia considers Medicaid expansion.

Under the Affordable Care Act, also known as Obamacare, states have the option to expand Medicaid to cover individuals earning up to 133 percent of the federal poverty level. In Virginia, this could mean as many as 400,000 new enrollees. But as we all know, making a program bigger rarely makes it better.

Medicaid is a broken program that needs serious reform. Until the federal government gives Virginia the flexibility to make these reforms – and until we can be absolutely certain Virginia taxpayers will not get stuck with a massive bill – Virginia cannot begin to consider expansion.

We must have reform first.

The costs of Medicaid are spiraling out of control. Medicaid is the fastest-growing line item in the state budget. It has grown from $3 billion in 2002 to more than $7 billion in 2012 – a staggering 133 percent increase. Medicaid now makes up almost 22 percent of the state budget, threatening to crowd out other key services.

Medicaid is inefficient, rigid and inflexible, providing patients with limited coverage options. The federal government mandates inflexible coverage policies that leave consumers without options. For example, podiatry services (specialized foot care) must be offered to all enrollees or to no enrollees at all. Also, Medicaid does not cover temporary transitional housing. Because of that, patients often bounce in and out of the hospital at a greater cost to the taxpayers.

And by many indicators, Medicaid patients are not receiving the quality health care they deserve. Because of low reimbursement rates, many doctors cannot afford to see and treat Medicaid patients, leaving those patients without important preventive care and forcing them to overuse emergency rooms.

A recent study from the University of Virginia showed that Medicaid patients often stayed longer in the hospital, with a higher risk of mortality, than insured and even uninsured patients.

These are just a few of the problems with Medicaid as it exists today. There are also serious concerns about white-collar fraud and abuse that need to be examined closely.

We can reformMedicaid by implementing better-coordinated services and managed-care options, adopting free-market principles such as cost-sharing, promoting health and wellness, and cracking down on fraud and abuse.

Enrolling more Virginians in a program that delivers too little and costs too much does not make much sense. We must reform Medicaid and make sure it works for the more than 1 million Virginians who already rely on it before we consider expansion.

Another key factor that cannot be overlooked: Who is going to pay for expansion?

The federal government has promised to pay for 100 percent of the cost of Medicaid expansion for the first three years. After that, the federal commitment decreases each year. By 2022, Virginia could be on the hook for more than $900 million, according to one estimate.

Our nation is $16 trillion in debt. Congress and the Obama administration have failed to agree on a budget for four years now. We have seen trillion-dollar deficit after trillion-dollar deficit. Forgive our skepticism, but we do not think Washington is any position to be promising to pay anyone else’s bills.

Proponents have misleadingly claimed that by not opting for expansion, Virginia is missing out on “free” federal money. This is simply wrong.

First, there is no pot of federal money sitting in Washington waiting for Virginia to claim its share. Every state has the option of expanding Medicaid and if a state decides against that, those savings are applied back to the bottom line.

In reality, we both know that the federal government is broke. Any money spent to expand Medicaid in Virginia will be borrowed. According to a recent Wall Street Journal article, if only half of the states opt against expansion, the federal deficit could be reduced by more than $500 billion.

More than 1 million Virginians rely on Medicaid today. Over 60 percent are children. Expanding this program without reform will increase costs to taxpayers and lower the quality of care. That is unfair to those currently enrolled in Medicaid and would amount to a false promise to new enrollees.

We must reform Medicaid first, and we must make sure that the federal government is not going to leave Virginia taxpayers with a massive bill we cannot afford to pay.

Virginia gained its reputation as a well-managed state by addressing policy challenges in a deliberate and responsible way. We must take the same approach to Medicaid expansion.

Del. John M. O’Bannon, a Republican, is a practicing physician and represents the 73rd district in the Virginia House of Delegates, which includes parts of the city of Richmond and Henrico County. Del. R. Steven Landes, a Republican, represents the 25th District which includes parts of Augusta, Albemarle and Rockingham counties. Both serve on the Medicaid Innovation and Reform Commission. Contact O’Bannon at DelJOBannon@house.virginia.gov. Contact Landes at DelSLandes@house.virginia.gov.