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Virginia lawmakers pass Medicaid expansion; 400,000 will gain access to coverage in 2019
In late May 2018, Virginia lawmakers passed a budget (HB5002 and HB5001) that calls for the expansion of Medicaid starting in January 2019. Governor Northam hailed the budget as a victory, and has said he will sign it “as quickly as possible” after he and his staff review it to ensure there are no technical issues. Starting in 2019, Medicaid will be available to Virginia residents earning up to 138 percent of the poverty level (in 2018, that’s about $16,753 for a single person, and about $28,676 for an adult in a household of three people).
Non-disabled adults will be required to work (or be in school or participating in other community engagement activities) in order to be eligible for Medicaid, and enrollees with income above the poverty level will have to pay premiums of up to 2 percent of their income. So this is not a no-strings-attached expansion of Medicaid. But it’s a significant step forward in a state where hundreds of thousands of people have thus far been denied access to one of the ACA’s primary reform tenants (under the ACA, all states were to expand Medicaid. But the Supreme Court ruled in 2012 that expansion was optional, and that states would not lose their existing Medicaid funding if they didn’t expand).
An estimated 400,000 people are expected to become eligible for coverage under the expanded guidelines. About 138,000 of them are currently in the coverage gap, not eligible for Medicaid in Virginia, and also not eligible for premium subsidies because their income is too low (ie, under the poverty level). The expansion of Medicaid will make coverage realistically available to this group for the first time. In addition, people with income between 100 percent and 138 percent of the poverty level, who are currently eligible for significant premium subsidies and cost-sharing reductions in the exchange, will become eligible for Medicaid instead, with far lower out-of-pocket costs.
Governor Ralph Northam—continuing the work of his predecessor, Terry McAuliffe—has pushed for Medicaid expansion since taking office in January 2018. Several days before lawmakers passed the budget with Medicaid expansion included, Northam had vetoed bills that would have expanded access to association health plans, lengthened short-term health insurance plans, and expanded eligibility for catastrophic health plans. In his statements regarding the vetoes, Northam noted repeatedly that the best thing Virginia could do to stabilize the insurance market and make coverage available to more people would be to expand Medicaid.
Republican lawmakers in Virginia had resisted Medicaid expansion for the last five years, but Democrats gained numerous seats in the House of Delegates in the 2017 election, and ultimately, four Republican Senators joined with all of their Democratic colleagues to support Medicaid expansion, passing the budget bill by a vote of 23-17.
The new eligibility rules will take effect in January 2019. For the rest of 2018, Medicaid eligibility guidelines in Virginia are unchanged from 2013, and non-disabled adults without dependent children are ineligible for Medicaid regardless of how low their income is. And according to Medicaid expansion advocates, Virginia has been missing out on $142 million in federal funding every month since the start of 2014, as a result of not expanding Medicaid. But that will change in 2019, when federal Medicaid expansion funding starts to flow into the state. In 2019, states that have expanded Medicaid (including Virginia) will pay 7 percent of the cost, and the federal government will pay 93 percent. Starting in 2020, states will be responsible for 10 percent of the cost, and it will remain at that level going forward.
In 2018, Virginia is one of the 19 states still using the old eligibility rules. But Medicaid expansion could take effect in several states in the near future. Maine voters approved a Medicaid expansion ballot initiative in November 2017, but Governor LePage has pushed back against implementation of the voter-approved law, and the issue is currently tied up in a legal battle. In addition, voters will have the opportunity to decide on Medicaid expansion in Utah and Idaho in the 2018 election, and possibly also in Nebraska
Some strings attached: A Medicaid work requirement and premiums for people earning more than the poverty level
Virginia’s Medicaid expansion includes a work requirement, dubbed the Training, Education, Employment and Opportunity Program, which will require many of the newly-eligible enrollees to work, attend school, participate in job training programs, or other forms of “community engagement.” It will apply to non-disabled adults (ages 19-64) who are enrolled in Medicaid and not otherwise exempt from the program (exemptions will be granted for various populations, including pregnant and postpartum women, a parent caring for a dependent child, and medically frail and severely mentally ill enrollees). The work requirement will be phased in for new enrollees: Starting three months after enrollment, they will need to participate in community engagement activities at least 20 hours per month. That gradually increases until enrollees must be participating in community engagement activities at least 80 hours per month once they’ve been enrolled in Medicaid for a year.
The Trump Administration began allowing Medicaid work requirements in 2018, for the first time. And the inclusion of the work requirement was a key component of getting Republican support for Medicaid expansion in the Virginia Senate. After the budget is signed by Governor Northam, Virginia will have 150 days to submit an 1115 waiver to CMS, seeking permission to impose a Medicaid work requirement. The expectation is that the Trump Administration will approve the work requirement, but Medicaid expansion will take effect January 1, 2019 in Virginia, even if the work requirement waiver has not yet been approved at that point.
The Virginia budget also calls for people with income between 100 and 138 percent of the poverty level to pay premiums for their Medicaid coverage, as well as cost-sharing “designed to promote healthy behaviors such as the avoidance of tobacco use, and to encourage personal responsibility and accountability related to the utilization of health care services such as the appropriate use of emergency room services.” The premiums will be set on a sliding scale, and will range from $1/month to 2 percent of income. Medicaid premiums and cost-sharing, like work requirements, are a favorite of conservative lawmakers who see them as a way to ensure that enrollees have “skin in the game.” Such measures are controversial, however, as they can serve as a barrier for low-income people to be able to maintain coverage and afford necessary health care.
The road to expansion in 2018: House wanted expansion, Senate did not. Regular session ended in an impasse, so lawmakers convened a special session.
Governor Ralph Northam was elected in a decisive victory in the 2017 election, and one of his main campaign promises was to expand Medicaid. But as evidenced by former Governor Terry McAuliffe’s four years of trying to expand Medicaid (details below), the state’s lawmakers have the final say. Virginia Democrats gained significant ground in the House of Delegates, but a tie-breaker win went to the Republicans, who now hold a 51-49 majority in 2018.
Legislation (SB 572) was introduced in the Virginia Senate in January 2018 to expand Medicaid (albeit with work requirements and premiums), but a party-line vote in the Education and Health Committee killed it before the end of January. The following week, a House committee voted 14-3 in favor of HB 338, which would impose work requirements on some current Medicaid enrollees in Virginia. HB338 passed in the house in February, with a 64 to 36 vote, but it did not advance in the Senate.
Former Governor McAuliffe’s proposed budget was under review in the 2018 legislative session, and it called for Medicaid expansion — as had McAuliffe’s proposed budgets for the three previous years. In the House, two budget bills — HB29 and HB30 — were considered, and both included Medicaid expansion (HB29 was a short-term budget bill, covering the first half of 2018; HB30 was a two-year budget bill, starting where HB29 ended). Both budget bills passed by a wide margin in the House, with bipartisan support. So the Virginia House of Delegates essentially voted in support of Medicaid expansion three times during the 2018 session, passing HB338, HB29, and HB30 (although HB338 was based on the premise that the state would seek permission from the federal government to impose a work requirement as a condition of Medicaid expansion). 2018 was the first time that the Virginia House had voted in favor of Medicaid expansion — due in large part to the gains that Democrats made in the 2017 election, and the fact that Virginia voters clearly support Medicaid expansion.
The Senate, however, continued to steadfastly reject Medicaid expansion, and the result was an impasse on the budget. The regular legislation session ended in March with no budget agreement, and considerable tensions between the House and Senate on the issue of Medicaid expansion. Gov. Northam called lawmakers back for a special session that began on April 11, to continue to work on the budget. Lawmakers had to have a budget in place by July 1 in order to avoid a government shutdown. Governor Northam proposed a new budget, which was under consideration during the special session via HB5001 and HB5002.
The House Appropriations Committee approved the new budget on April 13, with an enhanced work requirement, designed to get Republicans in the Senate to support the measure (at least two Senate Republicans had to vote yes on a budget with Medicaid expansion in order to pass it; ultimately, four Senate Republicans supported the measure). The budget bills the House passed earlier in 2018 had called for a work requirement, but enrollees would not have been lost their Medicaid coverage for non-compliance. The new budget bill stipulates that the work requirement will be an enforced condition of continued enrollment in Medicaid. The revised budget also allocates funding to help people comply with the work requirement, for programs such a job training.
Medicaid expansion proponents wanted Virginia to expand Medicaid as called for in the ACA. But conservative lawmakers have insisted on work requirements before they’ll consider expansion. And the Trump Administration has indicated that they’ll be lenient in approving work requirements (and has already done so for Kentucky, Indiana, and Arkansas), which was a non-starter under the Obama Administration.
Work requirements are popular among GOP lawmakers, but the vast majority of Medicaid recipients are either disabled or too sick to work, or else they’re already working, caring for children or elderly relatives, in school, or looking for work. There’s a pervasive myth that Medicaid recipients are able-bodied and not working, but that’s simply not the case.
Medicaid expansion proponents consider Virginia’s new budget to be a win for the state, despite the inclusion of the work reqirement. Medicaid expansion with no strings attached might have been a better option, but it was politically nonfeasible, and perfect is the enemy of good. Despite the work requirement, hundreds of thousands of Virginia residents will gain access to quality health coverage in 2019.
Governor McAuliffe previously tried to expand Medicaid, but lawmakers foiled his efforts
Governor McAuliffe took office in January 2014, and had long said that Medicaid expansion was one of his top priorities. It was a contentious issue between the Governor and the state legislature, with a government shut-down that loomed in the summer of 2014 because of budget disagreements pertaining to Medicaid expansion.
The “Virginia Way” was advanced in the legislature in early 2014 as a modified approach to Medicaid expansion, but it didn’t go anywhere, as the Republican majority in the legislature continued to insist on Medicaid reform before there’s any possibility of expanding coverage to more people.
Eventually, Governor McAuliffe pulled back from his push for full expansion, settling instead for an approach that would have worked with what the state already had and made some minor expansions that could eventually bring health insurance to 200,000 of the state’s most vulnerable residents. Governor McAuliffe outlined his ten-step plan in September 2014.
Shortly after that, in mid-September, the legislature convened for a special session on the budget, which included a proposed bill to expand Medicaid. It was heavily debated during the special session, but was rejected in a 64-33 vote in the House and did not make it to the Senate.
The state Medicaid Director, the Governor, and Democrats in the Legislature (along with one Republican, Thomas Davis Rust of Fairfax) continued to push for some form of Medicaid expansion, and 61 percent of Virginia’s residents supported Medicaid expansion as of late 2014, while only 31 percent opposed it.
In early 2015, Gov. McAuliffe included Medicaid expansion in his budget proposal, but both the House and Senate budget committees rejected that aspect of the budget immediately (although they did include some funding for community clinics and treatment for severely mentally-ill patients). Unlike 2014, when a budget stalemate nearly triggered a government shutdown, the Governor signed the new budget in March 2015, well in advance of the start of the new fiscal year.
The issue of Medicaid expansion was revisited during the 2016 legislative session, but lawmakers once again rejected funding for Medicaid expansion in the budget bill during the 2016 session. McAuliffe vetoed a measure in 2016 that would have exempted direct primary care arrangements from the regulatory oversight that applies to health insurance products, and in issuing his veto, the governor noted that Medicaid expansion would be a much more effective means of ensuring that people have access to affordable, comprehensive health coverage.
[The following year, during the 2017 legislative session, Virginia lawmakers passed H.B.2053 (and the companion senate bill, S.B.800), which exempts direct primary care arrangements from insurance oversight; Governor McAuliffe signed the legislation into law in April 2017.]
In September 2016, Governor McAuliffe reiterated his point that Medicaid expansion would help to close the budget gap that Virginia is facing. When McAuliffe left office in January 2017, Medicaid had still not been expanded in Virginia. But his successor, Governor Ralph Northam, campaigned on the promise of expansion, and Democrats gained considerable ground in the state legislature in the 2017 election, in large part due to the Medicaid expansion issue.
Who is eligible for Virginia Medicaid?
In addition to low-income elderly residents and those who are disabled, Medicaid is available to the following populations in Virginia:
Starting in January 2019, Medicaid will be available to adults (who have been lawfully present residents for at least five years) who earn up to 138 percent of the poverty level. Work requirements will apply unless the person qualifies for an exemption.
Before January 2019, the following Medicaid eligibility guidelines apply in Virginia:
- Pregnant women with household incomes up to 143 percent of poverty.
- Virginia also offers FAMIS – Family Access to Medical Insurance Security – which provides health coverage for uninsured pregnant women who are not eligible for Medicaid but have household incomes up to 200 percent of poverty.
- Parents with dependent children are eligible if their household income is up to 49 percent of poverty (about $9,700/year for a family of three).
- Children are eligible for Medicaid if their household incomes are up to 143 percent of poverty. Above that level, they are eligible for CHIP (Cover Virginia’s FAMIS program) if their household incomes do not exceed 200 percent of poverty.
How do I apply?
2014 enrollment; Virginia uses new reporting method
By mid-April 2014, 48,660 Virginia residents had enrolled in Medicaid or CHIP through HealthCare.gov. They were eligible based on the pre-2014 enrollment guidelines, but may not have known that Medicaid was available to them. Medicaid enrollment is year-round, so there is no specific time during the year when people need to enroll.
When CMS released total Medicaid enrollment numbers for August 2014, Virginia’s total was 5.2 percent lower than it was prior to October 2013. But that’s the result of a change in how the state reports the data; starting in August, Virginia stopped including people with limited Medicaid benefits among the total enrollees.
By June 2016, total enrollment in Virginia’s Medicaid program was 968,666, which was 4 percent higher than it had been in late 2013 By March 2018, enrollment had grown to 1,023,463, a 9 percent increase since late 2013. Once Medicaid is expanded in January 2019, enrollment is expected to grow by about 40 percent, with the addition of 400,000 newly-eligible people.
Virginia Medicaid history
Medicaid became effective in Virginia in July 1969, making it one of the last states in the country to implement the program (the first states to provide Medicaid did so in January 1966).
In late 1991, CMS approved Virginia’s Medicaid waiver application to begin a Medicaid primary care case management program dubbed MEDALLION. The case management system was a response to escalating costs, increasing use of emergency rooms in lieu of primary care, and physician reluctance to treat Medicaid patients. The managed care model began as a pilot program in five counties, but was considered a success and expanded statewide in 1995. Virginia was also one of the first states to expand the managed care program to include elderly, blind, and disabled Medicaid recipients (these populations had typically always been covered by traditional Medicaid in each state, rather than managed care).
By 1995, in select areas of the state, Virginia Medicaid recipients were able to choose from among a variety of Managed Care Organizations (MCOs) under the Options Program. This was the first time MCOs were used in the Medicaid program in Virginia.
The Medallion II MCO took effect in 1996, and it was gradually expanded across the state. By 2001, there were seven MCO partners in the Medallion II program. In the ensuing years, there have been numerous consolidations, entries, and exits on the part of MCOs. Overall, the state has concluded that MCOs are the most cost-effective way to provide Medicaid benefits to eligible residents.
Virginia created FAMIS (Family Access to Medical Insurance Security) in 2000, following the creation of CHIP (Children’s Health Insurance Program) by the federal government in 1997. FAMIS-eligible families can choose to enroll in available employer-sponsored insurance and receive help with the premiums if that is deemed more cost effective than directly providing coverage through the FAMIS program.
Some ACA savings for Virginia, even without Medicaid expansion
The state is taking advantage of the fact that the ACA allows Medicaid to cover inpatient care for prison inmates, instead of having the Department of Corrections foot the bill. Virginia started doing this in 2014, and it’s estimated to have saved the state about $1 million in the first year, because Medicaid expenses are split with the federal government, while DOC expenses are covered by the state.
Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org. Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.