- The Washington Times - Wednesday, October 26, 2011

Funding for the department that oversees Medicaid in Virginia has swelled by 143 percent over the past decade as the state grapples with increased health care costs and the prospect of dramatically expanded participation starting in 2014 as a result of federal reforms.

Appropriations to Virginia’s Department of Medical Assistance Services (DMAS), which oversees the federal-state health care program for low-income residents, ballooned from $3.2 billion in 2002 to $7.5 billion in 2011.

“It’s been phenomenal,” Delegate Harvey B. Morgan, Gloucester Republican, said of the growth. “Come 2014, we will have a significant increase in the people we are required to cover.”

Effective in 2014, Medicaid eligibility will expand to almost everyone under 65 with incomes up to 133 percent of the poverty line, under the federal reforms. In fiscal 2011, about $7.2 billion was spent on nearly 1 million recipients in Virginia. The new requirements could expand eligibility to as many as 420,000 additional recipients.

To prepare, the state is in the process of setting up a health insurance exchange, even as Attorney General Kenneth T. Cuccinelli II fights the federal health care law in court. The administration of Gov. Bob McDonnell estimates that the Affordable Care Act, due in large part to the eligibility levels, could cost the state an additional $1.5 billion between 2017 and 2022.

Virginia is not alone. Other states have had to find ways to pay for rising Medicaid costs as well. The number of states with some type of Medicaid-related health-care provider tax increased to 46, plus the District of Columbia, in fiscal 2011, according to the National Conference of State Legislatures.

Money from the American Recovery and Reinvestment Act, or the stimulus package, had helped cushion the blow for Virginia during the recession as Medicaid enrollment increased.

In fiscal 2010 and fiscal 2011, DMAS was bolstered by about $1.5 billion in federal stimulus dollars. The stimulus bill also boosted the federal share of the program to almost 62 percent, rather than 50 percent, for fiscal 2010 before the rate gradually wound down to 56.6 percent by the close of fiscal 2011.

Sen. Walter A. Stosch, Henrico Republican, said one reason for the increase in spending on the Medicaid program is that, with people living longer, more families have had to rely on the program for long-term care.

Medicaid spending could also be affected by the outcome of ongoing negotiations with the Department of Justice, which in February released a report critical of Virginia’s system of care for the intellectually and developmentally disabled, he said.

The General Assembly during the 2011 session passed legislation earmarking $30 million for a fund to go toward providing services for disabled Virginians in response to the report.

“It’s going to be a very, very difficult matter coming up to deal with in the budget,” Mr. Stosch said. “It’s not going to be easy.”

While costs have jumped, Virginia ranks 48th in per-capita spending on Medicaid, according to the Virginia Hospital and Healthcare Association, a trade association of hospitals and health systems in the state.

Among the reasons, the state’s Medicaid eligibility requirements are rather strict, making it more difficult for people to enroll, and provider payments are relatively low, said Katharine Webb, senior vice president of VHHA.

She said, for example, that nursing homes lose $13 a day on every Medicaid patient.

“It’s a tough program, and yet I think the members of the General Assembly and the governor are rightly concerned about the growth in the dollars,” she said.

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