Battle of Virginia’s budgets intensifies as House committee takes aim at Senate alternative to Medicaid expansion

The battle of the budgets intensified on Tuesday, as the House Appropriations Committee took aim at a Senate proposal to expand services in Virginia’s Medicaid program without paying for them, rather than use additional federal money to fully expand the program for more than 300,000 uninsured Virginians under the Affordable Care Act.

The House Appropriations Committee released an analysis of the Senate proposal to amend an existing Medicaid waiver. It estimates the full cost at $441.5 million to serve almost 61,000 Virginians with mental illness, substance use disorders or life-threatening, complex medical conditions. If capped at 20,000 people, as the Senate has proposed, the state cost would be $186 million for two years.

The Senate plan is based on legislation sponsored by Sen. Siobhan Dunnavant, R-Henrico, to create a “Priority Needs Program” under Medicaid. The plan also would serve 2,300 people with developmental or intellectual disabilities who are waiting for services under Medicaid waivers for people outside of state institutions, and require screening of almost 500,000 children for childhood trauma.

But the plan does not include funding for the services or the required application to the Centers for Medicare & Medicaid Services, or CMS, for approval of the partial expansion and federal matching funds to pay for it.

“There is absolutely no money in the budget for the waiver,” said Susan Massart, a committee fiscal analyst for health and human resources.

Senate response

Sen. Steve Newman, R-Lynchburg, chairman of the Senate Education and Health Committee, responded Tuesday that the Senate budget would not accept enhanced federal funding under the Affordable Care Act to expand Medicaid to all low-income Virginians. Instead, he said the plan would provide additional services under the state’s existing program to serve more people in vulnerable populations — if the money is available to pay for it.

“If there is funding, then you would take care of the most vulnerable,” said Newman, who also serves on the Senate Finance Committee that created the proposed budget.

However, the decision to not expand Medicaid under the Affordable Care Act leaves a $421 million hole in the two-year budget proposed in December by then-Gov. Terry McAuliffe, with a total gulf of about $600 million between the proposed Senate and House budgets.

Consequently, the Senate budget would provide far less funding than the House plan for a wide range of public services — K-12 and higher education, transportation, economic development, and compensation for state employees, teachers, college faculty, state-supported local employees, and workers in high-turnover, high-stress jobs.

House budget negotiators

The budget battle soon will move to a conference committee of members from the House and Senate.

House Speaker Kirk Cox, R-Colonial Heights, named six House members to the conference committee on Tuesday. All of them voted for the two budget bills — one for the budget that ends June 30 and the other for the two-year budget beginning July 1 — including Medicaid expansion.

The House conferees are: Appropriations Chairman Chris Jones, R-Suffolk; and Dels. Chris Peace, R-Hanover; Barry Knight, R-Virginia Beach; Scott Garrett, R-Lynchburg; Luke Torian, D-Prince William; and Mark Sickles, D-Fairfax. Only Jones and Torian have served previously as House budget conferees.

The Senate has not announced the members it will appoint to the conference committee.

Priority needs

The Senate included the “priority needs” plan in the budget as an “aspirational” goal, Newman said. “We included a cap of 20,000 for the most vulnerable people who are out there, and we did that without going under the Affordable Care Act.”

But Massart said she considers it unlikely that CMS would approve the application, which she said lacks the clear goals required in a demonstration waiver under the Social Security Act.

“To be a demonstration project, you have to be demonstrating something,” she said during a lengthy staff presentation that compared the two competing budgets. “You have to achieve something.”

Work requirement

The House plan also would seek federal approval of a waiver under Section 1115 of the Social Security Act that would, among other things, require all Medicaid recipients to engage in some form of work, including education, training or public service.

However, Newman said he does not support House Bill 338, proposed by Del. Jason Miyares, R-Virginia Beach, and approved by the House as the blueprint for the work requirement under the proposed federal waiver. He said the bill, due before his committee on Thursday, is too “watered down” to accomplish the goal of requiring Medicaid recipients to work.

“It’s a show bill,” he said, “and in my committee, I’m not inclined to support show bills.”

Income threshold

Both proposed budgets would raise the income threshold for Medicaid eligibility to 138 percent of the federal poverty level, or $17,000 a year for a single person. The House plan would apply to all Virginians up to that income level, including childless adults and low-income parents who are currently excluded.

The Senate plan would raise the threshold from 100 percent to 138 percent for people with qualifying disabilities under the GAP program originally adopted in 2015 as a stopgap that McAuliffe had proposed in the absence of full Medicaid expansion.

The plan also would add inpatient hospital and emergency services for people covered by the GAP waiver, as well as services provided under a separate waiver for “addiction recovery treatment services” and under the state’s Commonwealth Coordinated Care Plus waiver for clinical medical services to the elderly and disabled.

Funding mechanisms

The funding of the proposed services in the Senate plan would be split on a 50-50 basis between the state and federal governments. In comparison, the House budget proposal to expand Medicaid under the Affordable Care Act would rely on federal funds for no less than 90 percent of the cost, with the remaining 10 percent covered by a proposed “provider assessment,” a tax on inpatient hospital revenues.

Senate Republicans contend their proposed budget is more fiscally responsible than the House plan, which would deposit about $90 million less in a new revenue reserve to reassure concerns on Wall Street about the state’s fiscal outlook.

However, on Tuesday, the Senate Finance Committee reduced its proposed deposit into the cash reserve by $15 million in order to balance the first year of the two-year budget, moving the additional appropriation into the second year in response to concerns expressed by House budget officials.

The Senate budget would deposit $180 million into the new cash reserve over two years, which would be $90 million less than McAuliffe proposed in the budget he introduced in December. The House plan would deposit an additional $91 million on top of the $156 million already committed to the reserve.

On Tuesday, the Finance Committee imposed a substitute for the House two-year budget to mirror the version the Senate passed. It then amended the bill to reduce the deposit into the reserve from $45 million to $30 million in the first year and raise it from $135 million to $150 million in the second.

Senate Finance Co-Chairman Emmett Hanger, R-Augusta, said the committee made the change after House budget officials expressed concern to finance staff about the first-year imbalance, estimated at $14.6 million.

“It’s just a little shifting there,” Hanger said.

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