Virginia State Capitol - South portico

Virginia state Capitol, South Portico.

Virginia’s Medicaid program estimates that it would lose $1.4 billion in federal support over seven years under the legislation Republican leaders in the U.S. Senate unveiled last week.

The estimate the Department of Medical Assistance Services released on Monday is double the projected effect on Virginia’s Medicaid program of health care legislation the U.S. House of Representatives adopted on May 4.

The difference reflects a lower annual growth rate than the Senate proposal, the Better Care Reconciliation Act, assumes in federal spending on Medicaid under a proposed system of per-capita caps.

Under the caps, Medicaid would no longer be an entitlement for all costs, which the federal and state governments have shared since the program’s adoption in 1965.

“The legislation currently up for a vote in the United States Senate would blow a hole in Virginia’s budget and severely impair our ability to offer health coverage and long-term care to the people who need them most,” Gov. Terry McAuliffe said in an announcement of the new projection by the state Medicaid program.

Earlier on Monday, McAuliffe used his position as chairman of the National Governors Association to ask Senate Majority Leader Mitch McConnell, R-Ky., for a delay in Senate action on the proposal in order to allow governors to review the legislation.

“It is critical that any changes to Medicaid and the private health insurance market reflect states’ experience as major health care purchasers, regulators and administrators who will be responsible for carrying out new reforms,” McAuliffe said in the letter, written with Massachusetts Gov. Charlie Baker, a Republican who is vice chairman of health and human services for the governors association.

The state’s biggest concern with the proposed Senate legislation is its imposition of per-capita limits on federal spending for the Medicaid program, which traditionally has been a shared responsibility by the federal and state governments on the costs of care for eligible recipients. Virginia shares those costs on a 50-50 basis with the federal government.

The proposed use of per-capita caps in the Senate and House legislation would go far beyond the stated intention of President Donald Trump and congressional Republicans to repeal and replace the Affordable Care Act, or “Obamacare.”

Both proposals would also phase out enhanced federal funding for expanding state Medicaid programs under the law then-President Barack Obama signed in 2010.

Virginia has not expanded its Medicaid program, but Republican budget leaders in the General Assembly have warned Congress not to punish states that have kept Medicaid spending low by limiting the federal share of the program’s costs as they grow over time.

“We urge you to seriously consider the impacts on states, especially related to the Medicaid program,” House Appropriations Chairman S. Chris Jones, R-Suffolk, and Senate Finance Co-Chairman Emmett W. Hanger Jr., R-Augusta, said in a letter last week to McConnell and Senate Minority Leader Charles E. Schumer, D-N.Y.

The latest state estimate reflects a proposed change in the inflation factor that the Senate bill would use after fiscal year 2024 to save the federal government money, which would shift costs to the states.

Instead of using a medical inflation component of the Consumer Price Index, estimated at 3.7 percent a year, the Senate bill would shift to an “urban factor” that would assume growth in costs at 2.4 percent a year.

In Virginia, the estimated loss in federal support for the program would jump from $117.2 million in fiscal year 2024 to $327.9 million the next year, an 85 percent swing. The next year, the hole would deepen to $493.5 million, bringing the total cost to the state to nearly $1.4 billion over seven years.

And states assume the deepening losses would continue, Deputy Secretary of Health and Human Resources K. Joseph Flores said Monday. “That’s what’s really spooking states.”

The American Health Care Reform Act that the House initially proposed would have cost Virginia about $1.8 billion in federal support for Medicaid over seven years, but a change in the inflation factor used in the approved version of the bill reduced the cost to about $708 million for the same period.

Virginia’s Medicaid office assumes that the actual costs of providing care to nearly 1 million Virginians — children, pregnant women, the elderly and the disabled — will be higher than what either bill assumes.

“The cuts in the current Senate bill would force states like Virginia to choose between cutting benefits for families who need them, slashing investments in other core services like education and transportation, or raising taxes,” McAuliffe said.

“On behalf of Virginia taxpayers, I urge leaders in Washington to drop this effort to push federal health care costs down to the states,” he said, “and work together to make coverage more affordable and accessible for every American.”

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