The biggest debate of the 2014 General Assembly session is undoubtedly the fate of Obamacare’s Medicaid expansion in Virginia.
We have been very clear that we oppose Medicaid expansion for several reasons.
First, Obamacare is a disaster. The website barely works, premiums have skyrocketed and perfectly good health care plans have been canceled. Virginia cannot irresponsibly entangle itself in Washington’s health care mess.
Second, Medicaid needs reforms. Medicaid costs are out of control, patients are not receiving the quality care they deserve and the program is plagued by waste, fraud and abuse.
Finally, and perhaps most importantly, Obamacare’s Medicaid expansion would have significant, long-term ramifications on Virginia’s budget process. We’re skeptical of any promises on the future costs of Medicaid expansion. We do not think the federal government will be able to keep its promise to pay the bill and we do not think long-term projections of “savings” will pan out.
Medicaid is a federal-state partnership program. In Virginia, we split the cost of Medicaid with the federal government 50-50. Under Obamacare, the federal government has promised to pay 100 percent of the cost for Medicaid expansion, but only for the first three years. After that, the burden begins to shift back to Virginia taxpayers until 2020, when the federal government will only pay 90 percent of the cost.
Based on the troubles with Obamacare, and our experience with Washington’s promises (if you like your plan, you can keep it), we’re skeptical.
The federal government is $17 trillion in debt and dealing with massive deficits every year. It cannot afford to write a blank check for Medicaid expansion. Eventually, the costs for Medicaid expansion will fall to Virginia taxpayers.
Leaders in Washington, including President Obama, are already looking at ways to shift the burden back to the states. During the 2011 deficit-reduction talks, Obama considered reducing the federal government’s share of Medicaid expansion costs. Congressman Paul Ryan, the chairman of the House Budget Committee, says “there’s no way” Congress will be able to continue funding the 90 percent match rate indefinitely.
When Congress and the president finally get around to dealing with our nation’s fiscal crisis, it is clear that one of the first items they will offload is the cost of Medicaid expansion. That will leave Virginia taxpayers with the bill. There’s no easy way to tell how much that will cost, but the answer is undoubtedly in the hundreds of millions dollars, if not more.
Gov. Terry McAuliffe’s administration has painted a rosy picture on Medicaid expansion to Virginia. The administration projects that expanding Medicaid will now save the commonwealth more than $1 billion by 2022. It is important to note that previous estimates projected costs ranging from $137 million to $2.1 billion.
The new projections seem unrealistic.
As we mentioned earlier, Medicaid needs significant reforms. Medicaid is the fastest-growing program in Virginia’s budget, having grown by 1,600 percent over the past 30 years and growing at 8 percent per year. There is a significant level of waste and fraud, evidenced by the nearly $200 million in Medicaid fraud settlements won by the attorney general’s office last year.
Yet somehow, Virginia can save money by expanding this rapidly growing program? History proves that idea very wrong. When it comes to entitlement programs, the track record of cost projections speaks for itself. With nearly every major entitlement program in the past 50 years, actual costs dwarfed original projections.
When Medicare was created in 1965, it was projected to cost $12 billion annually by 1990. It actually cost $110 billion in 1990, and today costs over $500 billion. The Medicare hospital insurance program, commonly known as Medicare Part A, was originally projected to cost $9 billion in 1992; the actual cost in 1992 was $67 billion. The first-year cost estimate for Medicaid was $238 million; the actual first-year cost was over $1 billion.
Time and time again, original projections were blown out of the water by the actual costs. Why would this time be any different? It reminds us of the story of Charlie Brown and the football from the classic “Peanuts” cartoon. Every time we’re made to believe that Lucy will let Charlie Brown kick the football, but every time we’re fooled.
Medicaid expansion is a bad deal for Virginia. Obamacare is a train wreck, the program needs serious reform and we cannot trust the empty promises being made by its supporters.
We support common-sense reforms that will strengthen Medicaid without having a negative impact on Virginia’s fiscal future. The Medicaid Innovation and Reform Commission has been working to enact reforms that will make Medicaid work more like private health care plans, helping to cut costs.
But we cannot stop there. We believe Virginia should conduct a comprehensive operational and financial audit of Medicaid, to find further ways to improve care and save money.
History and common sense tell us that this is the responsible, prudent approach.