Northam signs budget with Medicaid expansion, capping five-year battle

With the stroke of a pen, Gov. Ralph Northam ended five years of political warfare to expand Virginia’s Medicaid program after just five months in office.

Northam then turned to embrace Sen. Emmett Hanger, R-Augusta, one of the few Republicans gathered on the steps on the South Portico of the state Capitol on Thursday afternoon to witness the signing of a two-year, $117 billion budget that will expand health coverage for up to 400,000 uninsured Virginians on Jan. 1.

Hanger was one of a trio of Republican legislative leaders who worked with the new governor—a former legislator—to make Virginia the 33rd state in the country, along with Washington, D.C., to expand Medicaid under the Affordable Care Act.

“We showed Virginians and the world that chaos and partisan warfare may dominate Washington, but here in Richmond we still work together to do the right thing for our people, not our political party,” Northam said in a speech marked by sometimes soaring oratory delivered in a typically understated style.

The governor also credited House Speaker Kirk Cox, R-Colonial Heights, and House Appropriations Chairman Chris Jones, R-Suffolk, for working with Democratic leaders to dismantle a Republican firewall that had blocked Medicaid expansion for five years in the General Assembly.

But it was Hanger, as co-chairman of the Senate Finance Committee, who received the loudest and longest applause from an exuberant crowd gathered at the foot of the portico for the ceremony.

He succeeded on May 30 in pushing the compromise he had negotiated with Jones through a bitterly divided Senate, seven weeks after the beginning of a special session Northam called to end an impasse that left the state without a budget on March 10 after a 60-day session.

“Actually, it’s very gratifying,” Hanger said after the ceremony. “Not just for Medicaid expansion, but for the overall budget, which I think turned out extremely well.”

Jones didn’t attend the ceremony, but in a phone interview from his Suffolk pharmacy, called the spending plan “one of the best budgets I’ve worked on, period.”

“It’s an outstanding document that invests heavily in the overall health of our citizens,” he said.

Northam also praised the two budget bills—one for the current fiscal year that ends June 30 and the other for the biennium that begins July 1—for investments in raises for state employees and teachers, financial reserves to allay Wall Street concerns about the state’s ability to withstand an economic downturn and treatment of people with behavioral disabilities, both outside and inside state institutions.

‘Moral and economic imperative’

But the signature achievement of the budget, he said, was to “empower nearly 400,000 Virginians with access to health insurance by expanding Medicaid, without crowding out other general fund spending priorities.”

“As a doctor and a public servant, I believe making sure all Virginians have the access to the care they need to be healthy and productive is both a moral and economic imperative,” Northam said.

House leaders decided to drop their opposition to Medicaid expansion after Democrats picked up 15 seats in an electoral surge in November that shrank the Republican majority to two seats.

“Once the decision was made to proceed with Medicaid expansion, it opened up many opportunities in the budget itself,” said Jones, a 20-year House veteran who became Appropriations chairman four years ago.

Bond rating

Cox also didn’t attend the ceremony, but issued a statement that said the budget includes his conditions for Medicaid reforms, including a plan to seek federal approval of a work requirement for current and future recipients.

“Most importantly, we are already seeing the positive effects of the budget,” the speaker said, citing a report issued this week by Moody’s Investors Service that affirmed Virginia’s AAA bond rating and stable financial outlook.

Moody’s issued another report on Thursday, hours the budget signing, that judged Virginia’s Medicaid plan “credit positive” for hospitals “because expansion of coverage directly correlates with a reduction in uninsured or self-pay patients that would typically result in bad debt and charity costs for hospitals.”

Finance Secretary Aubrey Layne said the Moody’s credit positive rating would enable private hospitals in Virginia to borrow money at lower interest rates. “We just lowered the interest cost for all of them,” Layne said.

Sean Connaughton, who became president and CEO of the Virginia Hospital & Healthcare Association in 2014 during the last Medicaid showdown, said, “We believe what happened today will make Virginia hospitals and health systems stronger.”

Katharine Webb, a former senior vice president at the association who helped lead the unsuccessful fight in 2014, has been working as an advocate behind the scenes during this year’s push.

“It feels like the right thing, done the right way, by the right people,” Webb said, “and that’s the Virginia way.”

Dr. Bill Hazel had pushed for expansion as secretary of health and human resources for two governors, one who was opposed, Republican Bob McDonnell, and one who was in favor, Democrat Terry McAuliffe.

“I think this is a great opportunity for Virginia,” Hazel said in a phone interview from George Mason University, where he now works as a senior adviser. “This levels the playing field to help more people have the opportunity to be successful.”

The budget signing was especially sweet for advocates who have led the fight to expand Medicaid in Virginia for years. “It’s been grueling and challenging,” said Jill Hanken, health care attorney for the Virginia Poverty Law Center and a leader of the Healthcare for All Virginians coalition.

Hanken said advocates, lawmakers and state officials now must focus on implementing the law, beginning with dual efforts to receive federal approval of amendments to the state Medicaid to expand eligibility to adults earning up to 138 percent of the poverty level, or less than $17,000 a year, and waiver to impose conditions on recipients, including a work requirement.

“I have faith that the federal government will do its best to work with Virginia officials to expedite the process,” Northam said.

Crowning achievement

The ceremony was the crowning achievement for a governor who already has begun filling a trophy case of accomplishments five months after taking office.

“Northam has achieved a term-defining accomplishment in the first year,” said Larry Sabato, director of the Center for Politics at the University of Virginia. “He’s a MD anyway, so he may become known in history as the Medicaid Governor.”

Northam gave credit to McAuliffe, who worked tirelessly to expand Medicaid, only to be thwarted by then-House Speaker Bill Howell, R-Stafford, and a two-thirds Republican majority in the House that almost vanished just as Howell retired.

But Sabato said Northam’s personality and legislative background has allowed him to build bridges with Republican legislators who were put off by his predecessor’s brash, high-volume sales style.

“Northam really does have a good bedside manner with the legislature,” he said.

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