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Medicaid Expansion Update: Virginia General Assembly

During a September 2014 special legislative session, the Virginia General Assembly opposed expanding Medicaid to the state’s uninsured on a procedural vote of 64 to 33 in the House.  Twenty other states have similarly opted not to implement Medicaid expansion at this time, while 27 states and the District of Columbia are implementing such expansions under the nation’s Affordable Care Act.  The vote in Virginia’s special session was the culmination of many legislative and gubernatorial efforts on this issue in the last several years. 

Virginia’s Medicaid Program and Prior Legislative Actions
In Virginia, over one million people receive Medicaid services at some point during the year, costing nearly $7 billion annually (about half of which is paid for by the Federal government).  Virginia does not provide Medicaid coverage to childless adults, and the income eligibility limits cover parents at about 52% of the poverty level. Under a 2012 U.S. Supreme Court ruling (National Federation of Independent Business v. Sebelius), the Patient Protection and Affordable Care Act (ACA), which became law in 2010, allowed states the option to expand Medicaid coverage to the uninsured.

During its 2013 session, the Virginia General Assembly addressed the Medicaid expansion issue by creating a new legislative Medicaid Innovation and Reform Commission (MIRC) to “review, recommend and approve innovation and reform proposals affecting the Virginia Medicaid” program. Although the Commission has studied expanding the state’s Medicaid program, it has not yet recommended such an expansion.

Medicaid Expansion in 2014
Legislative and executive action on Medicaid expansion in Virginia has evolved around projected budget shortfalls and a changing political landscape. 

During the regular 2014 legislative session, the Virginia General Assembly was divided, with Republicans controlling the House of Delegates and Democrats controlling the Senate.  The state’s newly elected Governor Terry McAuliffe, a Democrat, made Medicaid expansion “the centerpiece of his campaign and his top legislative priority.” Once in office, Governor McAuliffe indicated that he would bypass the Medicaid Innovation and Reform Commission to expand the state’s Medicaid program to an additional 400,000 Virginians if the Commission did not do so by the end of the regular legislative session. 

The regular legislative session ended in early March with an impasse on Medicaid expansion, which was attached to the state’s two-year $96 billion budget bill.  Because some legislators believed that a government shutdown was possible if a budget deal was not worked out by July 1st, the Virginia General Assembly convened a special session in late March to resolve legislators’ differences on Medicaid expansion.  This special session ended with no resolution.

Two significant events over the summer resulted in the removal of the Medicaid expansion issue from the state budget legislation, thus avoiding a potential government shutdown and setting up a September 2014 vote on the Medicaid expansion issue.  First, the state’s budget situation worsened with a $1.55 billion shortfall in projected revenue, which threatened the state’s bond rating and pressured legislators to resolve the budget impasse.  Additionally, in June, Senator Phillip Puckett, a Democrat, unexpectedly resigned his Senate seat, giving the Republicans control of the Senate as well as the House.  To avoid a government shutdown and address some Republican legislators’ concerns with Medicaid expansion, the Virginia General Assembly passed the two year budget with a floor amendment that blocked increasing Medicaid spending without legislative approval

Because the state constitution requires that the Virginia General Assembly appropriate all spending, including federal pass-through money, Governor McAuliffe cannot unilaterally expand the Medicaid program to 400,000 uninsured Virginians by executive action, despite threats to do so.  Instead, Governor McAuliffe proposed in early September a plan to insure 25,000 uninsured Virginians  -- 20,000 mentally ill individuals and 5,000 children of state employees to be paid for by using $40 million in leftover state health funds.

In mid-September, the Republican leaders of the House of Delegates called another special legislative session to consider the Medicaid expansion issue.  After much debate for and against expanding Medicaid, the measure failed 64 to 33 in the House and did not proceed to the Senate.  On a vote of 65 to 32, the House also approved a resolution that allows the Speaker to hire an attorney to “halt any attempt by the Governor to expand the Medicaid program without the explicit approval of the General Assembly.” 

What Happens Now
Medicaid expansion will continue to be an issue, albeit a contentious one, in Virginia.  To continue his program to the mentally ill and children of state employees beyond July 2015, the Governor will need to seek the General Assembly’s approval.  Moreover, legislators on both sides of the aisle will likely introduce legislation during the next regular General Assembly session that addresses whether or not, and possibly how, to expand Medicaid coverage to Virginia’s uninsured.