RICHMOND — Virginia’s Republican-controlled House of Delegates has created a draft state budget that expands Medicaid, dropping years of partisan resistance in the face of pressure from newly empowered Democrats.
But the plan sets up a confrontation with the state Senate, which is also controlled by Republicans and did not include Medicaid expansion in the plan passed unanimously out of the Senate Finance Committee on Sunday evening.
The House plan, approved early Sunday by the Appropriations Committee on a 20-to-2 vote, would impose requirements that Medicaid recipients seek work training and contribute to their coverage through private insurers as a condition of receiving health coverage through the program aimed at aiding low-income individuals. House Speaker M. Kirkland Cox (R-Colonial Heights) praised the effort as a compromise worked out with the help of the Democratic governor, Ralph Northam.
“There’s no question that the political dynamics have changed,” Cox said. Democrats flipped 15 House seats in last fall’s Virginia House elections, reducing the Republican majority to 51 to 49.
In addition, Congress failed to kill the Affordable Care Act, which is what enables Medicaid expansion. “So it’s here to stay, and we felt the timing was right,” said Del. S. Chris Jones (R-Suffolk) who chairs the Appropriations Committee and led the budget effort.
Two people involved in budget negotiations said Republican leaders had polled their members in the House last week to see whether they should include Medicaid expansion. A majority said yes, partly because of support from delegates in the southwestern part of the state, where poverty and hospital closures have made health care an urgent issue.
Cox and Jones emphasized that the plan they laid out is similar to the Medicaid “enhancement” Vice President Pence oversaw when he was governor of Indiana, hewing to several conservative prerequisites on work requirements and personal responsibility.
“I give kudos to the governor for really seriously coming to the table on those,” Cox said.
Senate Majority Leader Thomas K. Norment (R-James City), co-chairman of the finance committee, said he expects “very spirited discussions” when the House and Senate attempt to reconcile their competing plans.
“This House of Delegates has had an epiphany or is going through a cultural revolution over there,” Norment said. noting how unusual it was for the Senate’s spending plan to be more fiscally conservative than the one proposed by the more traditionally conservative House.
Northam had called for straight Medicaid expansion, as his predecessor — Terry McAuliffe (D) — had advocated during all four years of his administration. McAuliffe’s final budget recommendation, which Northam is now carrying, was built on saving about $400 million by accepting federal dollars to expand Medicaid.
But Northam also signaled a willingness to compromise, as he praised the House plan. “I respect the priorities of the House majority and I am encouraged by and supportive of our work together to bring about a new ‘Virginia Way’ on Medicaid,” Northam said in a statement. “We can and should expand coverage and provide significant training resources, counseling and incentives to connect Virginians with employment opportunities.”
Northam said he looks forward to working with the House and Senate to finalize the plan. But he may face a steep climb in the Senate.
That body has rejected several bills this session that would have expanded Medicaid, in favor of an approach to extend some coverage to a very narrow group of the mentally ill.
The Senate budget followed that direction, rejecting federal Medicaid dollars and leaving $421 million less than the budget proposed late last year by McAuliffe. That $421 million gap forced Senate budget-writers to make some painful cuts, including the 2 percent raise McAuliffe had promised to teachers, state employees and local employees whose salaries are partially state-supported.
Democrats on the Senate panel voted for the budget plan but expressed disappointment it did not include Medicaid expansion. The shift in the House gave them hope that expansion will eventually be part of the budget, but some were frustrated that Senate leaders continue to resist.
“To me this is a no-brainer, so I really don’t understand the dance,” said Sen. Barbara Favola (D-Arlington).
The House plan would set aside about $21.5 million over the next two years for setting up the job training program for Medicaid participants. The proposal would allow Virginia to extend Medicaid coverage to residents who earn up to 138 percent of the federal poverty level, with 300,000 people expected to be added to the rolls.
It would go into effect by Jan. 1, 2019. There would have to be a federal waiver to implement the job training requirement, but Republicans said they believed the Trump administration would look favorably on the waiver request.
The plan would use health savings accounts to help new recipients participate in private insurance coverage, with cost-sharing provisions and incentives to keep up healthy behaviors. Nine categories of people would be exempt from the work or job training requirement, including pregnant women, children and people with major disabilities or who care for someone with a major disability.
The proposal also includes a “kill clause” that would discontinue expanded coverage if the federal government stops paying for it. Currently, the federal governments pays 90 percent of the cost of Medicaid expansion and states pay 10 percent.
The House budget would levy a fee on hospitals to cover the state’s portion.
Eight Democrats on the Appropriations Committee voted for the budget that included the Medicaid plan, with two abstaining.
“We’re pleased with the work that has been done and excited about the opportunity to finally give health care to people who really, really need it,” said Del. Luke E. Torian (D-Prince William).
The House budget would use Medicaid savings to fund a host of other programs, including the pay raises for teachers and other state employees; setting aside $247 million for a state reserve fund; and financing $350 million to deepen channels in the port in the Norfolk area.
The House budget also included a couple of unexpected higher education initiatives. One would set aside $50 million to start a project called CyberX — a college-level training and research facility aimed at programming, big data, autonomous vehicle and other cutting-edge technologies.
Run by Virginia Tech, the facility would be located in the Tysons Corner area but would have satellite efforts at colleges and universities around the state. Jones, who came up with the idea along with Virginia Tech President Timothy Sands, said the goal would be to get private industry to pitch in for a total investment of about $100 million.
The budget also includes $42.6 million in incentives to steer the state’s universities to crank out more degrees in the areas of data science, engineering, health care and education.
Much of that spending is predicated on the Medicaid portion, so pressure will be on for the next several weeks to reach some kind of agreement with the Senate. The legislature meets until March 10, and the budget is typically one of the last areas completed.