- Associated Press - Saturday, December 13, 2014

RICHMOND, Va. (AP) - When Virginia Gov. Terry McAuliffe unveils his budget proposal next week it will include a top but elusive goal: expanding Medicaid eligibility for low-income Virginians, according to two sources.

On Wednesday, McAuliffe is set to present a midcourse correction to the state’s two-year budget to be considered by lawmakers during the 2015 legislative session. Two state officials who have been briefed on the governor’s plans but spoke on condition of anonymity because they were not allowed to discuss them publicly said the plan will include expanding publicly funded Medicaid health insurance eligibility to about 400,000 able-bodied, low-income adults.

The GOP-controlled General Assembly has repeatedly rejected McAuliffe’s efforts to expand the program this year and is almost certain to do so again during next year’s session, which begins in January.

But even if a Medicaid expansion proposal is highly unlikely to succeed, some supporters want the governor to try anyway.

“Some issues are worth fighting for, and this is one of them,” said House Democratic Minority Leader David Toscano.

House Majority Leader Kirk Cox said McAuliffe’s efforts to resurrect Medicaid expansion will be counterproductive and only hurt his relationships with Republican lawmakers.

“We’ve taken three votes on Medicaid expansion; he knows where we’re at,” Cox said.

Lawmakers pass biennial budgets during legislative sessions that fall on even years and adjust those budgets on odd years.

Smaller-than-expected tax collections already prompted McAuliffe and the General Assembly to readjust the budget in September. Those actions included tapping into the state’s rainy day fund and setting aside $272 million in future cuts that McAuliffe will outline Wednesday. The governor may not have to cut as much as previously expected thanks to new savings in the state’s existing Medicaid program, public education and other areas.

McAuliffe’s proposed budget will call for the state to begin expanding Medicaid in 2016 and reap about $100 million in potential savings from the program, according to one of the officials familiar with the budget plan. The governor does not plan to include those savings as part of his efforts to fill the current budget gap but will instead propose setting aside the money for use at a later date, the official said.

The official said McAuliffe’s budget plan will not cut K-12 funding and will increase spending for distressed schools. McAuliffe also has said recently that he plans to seek increased spending on workforce development and other economic development incentives.

Expanding Medicaid coverage to low-income adults was a key part of President Barack Obama’s health care overhaul. A ruling by the U.S. Supreme Court made expanding an option, and about half the states so far have opted to do so.

Under the Affordable Care Act, the federal government has pledged to pay for the vast majority of the costs of expanding Medicaid. Supports of expansion say it will boost the state’s hospitals while reducing state spending on indigent care.

“This is our money going to other states,” McAuliffe said Friday during a monthly radio appearance. The governor discussed parts of his proposed budget but did not specify whether it would include Medicaid expansion.

But Republicans have said Virginia will not be able to afford the long-term costs associated with a large safety net expansion.

McAuliffe made expanding Medicaid his top legislative priority during the 2014 legislative session and has vowed on multiple occasions to expand the program. But the governor lost significant leverage on the issue after a Democratic senator unexpectedly resigned in June, flipping control of the Senate to the GOP.

Cox said one of the reasons Republican agreed to tap the state’s rainy day fund this fall was to further diminish the governor’s leverage. Cox said that tapping the reserve fund early weakened the governor’s ability to use a severe budget shortfall as an excuse to push through a Medicaid expansion plan.

“It’s a lot less viable option,” Cox said. “That was, frankly, one our key goals in September.”

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Alan Suderman can be reached at www.twitter.com/AlanSuderman.

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