CHARLOTTESVILLE — The Virginia Senate may consider a proposal to completely redesign the state’s Medicaid program not only to expand eligibility but also to address growing concerns about the health insurance marketplace and behavioral health treatment.
The staff of the Senate Finance Committee recommended Friday that the state launch a “Medicaid redesign initiative” that would rely on federal waivers used by a number of states to expand the program within specific guidelines.
Those options include a global Medicaid waiver, already used by two states to reshape their programs, or a “super waiver” that could blend a pair of waivers under the Social Security Act, including one that could be used to shore up the deteriorating health insurance marketplace in the face of shifting federal policy under President Donald Trump.
“Such a waiver could possibly protect the state from changes in federal funding of Medicaid,” fiscal analyst Michael Tweedy told the committee at the second day of its two-day budget retreat here.
The proposed initiative appears to have some support on both sides of the partisan aisle after failed efforts by Trump and Congress to cap federal funding of state Medicaid programs and an electoral tidal wave that almost dismantled the “firewall” against program expansion in the House of Delegates.
Sen. Siobhan S. Dunnavant, R-Henrico, a physician who has opposed Medicaid expansion, said after the retreat that she is interested in pursuing global or super waivers to reshape the way the state provides health and human resources, both for medical care and behavioral health treatment.
“It’s definitely on my radar … I believe we can find a bipartisan solution to all of this,” Dunnavant said.
Senate Finance Co-Chairman Emmett W. Hanger Jr., R-Augusta, who has supported past attempts to use federal funds under the Affordable Care Act to expand health coverage to uninsured Virginians under Medicaid, said the “numbers haven’t changed on the Senate side” on Medicaid expansion, which the chamber has rejected before along party lines.
However, Hanger said that Virginia should accept federal funds if they are still available to cover 90 percent of the costs of expansion as part of a broader plan to address growing pressure on treatment of mental illness and substance use disorders, as well as erosion of the health insurance market.
“We’re going to have to spend some time working up some options,” he said, “We need to come up with a plan that has broad-based support.”
Secretary of Health and Human Resources Bill Hazel, a retired orthopedic surgeon who has served both Republican and Democratic governors, said Friday that he is “somewhat optimistic at this stage” about a solution that would included Medicaid expansion as part of a broad-based restructuring of Virginia’s health and human resources programs.
Combining federal waivers “does give you the opportunity to blend Medicaid and the marketplace in some ways that might make sense,” he said in a telephone interview Friday.
The proposal outlined by Tweedy would create a team of state officials, legislators and health experts to: explore opportunities for federal waivers that other states have used to expand Medicaid eligibility with additional requirements for recipients; improve a limited range of services under Medicaid for people and combine behavioral and medical health care; and look for ways to address the underlying social problems that drive up the cost of care, particularly in low-income populations.
Legislators in both parties are concerned about the increasing cost of Virginia’s current Medicaid program, projected to increase by about $670 million in this fiscal year and the next biennium, based on growth rates that some legislators think may be too low.
Medicaid has grown an average of 6.4 percent a year over the past decade, but the new forecast assumes growth of about 2.3 percent in the fiscal year that will begin July 1 and 3.4 percent the following year.
“How is that possible?” asked Sen. Ryan T. McDougle, R-Hanover.
Tweedy said the state will save money by expanding the use of managed care to coordinate services both to 216,000 people who are elderly or disabled, as well as an impending contract for the women, children and low-income parents who comprise most of the one million Virginians in the program.
McDougle, who is chairman of the Senate Republican Caucus, pressed the point by asking whether those savings would accrue fast enough to avoid increasing the amount of money the Medicaid program will need from the state general fund budget.
“It’s a possibility,” Tweedy said.
McDougle retorted, “My daughter still believes in the Tooth Fairy.”
Expanding Medicaid under the Affordable Care Act would produce estimated net savings of $138 million in the next two-year budget, which Gov. Terry McAuliffe will propose on Dec. 18. “I think to make (Medicaid redesign) work, we’ve got to do the expansion piece to get it off the ground,” Hazel said.
Gov.-elect Ralph S. Northam campaigned on a promise to expand Medicaid to up to 400,000 uninsured Virginians, but it isn’t clear whether he will have the votes in the General Assembly to do it. Republicans cling to a 51-49 advantage in the House with recounts certain in at least three closely contested district elections.
In the Senate, Republicans have a 21-19 margin, with Hanger as a swing vote and Lt. Gov.-elect Justin Fairfax as the tiebreaker. Speculation also continues to swirl around the possibility that Northam will try to shift the balance of power in both chambers by offering attractive jobs to Republican legislators.
Sen. Frank W. Wagner, R-Virginia Beach, has been mentioned as a possible secretary of transportation, succeeding Aubrey L. Layne Jr., whom Northam named as finance secretary on Thursday.
Wagner said Friday he hasn’t spoken to anyone about the job. “I’d have to look and see what is offered,” he said. “I’ve never had so many people concerned about my future.”
Northam also has not named a secretary of health and human resources.
Hazel, who served as secretary for Gov. Bob McDonnell before McAuliffe, said he does not know what the governor-elect and his transition team are going to do, but he added, “I would sure love to contribute in ways others think I can help.”