| By Katie O’Connor and Sarah Kleiner
Cuts to Medicaid prescribed by the American Health Care Act could lead to a drastic reduction in services for Virginians with disabilities, policy experts and lawmakers said last week.
In Virginia, 1 in every 8 residents rely on the state’s Medicaid program. That includes one-third of Virginia’s children and two-thirds of its nursing facility residents.
The state projects that the financial loss to its Medicaid program under the bill, which has passed the U.S. House of Representatives but still requires Senate approval, is $22 million in the first year, $191 million in the seventh year, and $689 million total over seven years, beginning in 2020.
And according to Virginia’s Medicaid chief, the American Health Care Act would spell bad news for many — if not all — of its members, particularly the elderly and individuals with disabilities.
“Obamacare did not do anything to the current Medicaid program, and the legislation that’s out there essentially puts serious constraints on the current Medicaid program to save the federal government $800 billion,” said Cindi B. Jones, director of the Department of Medical Assistance Services. “It’s going to be significant to Virginia.”
The AHCA is meant to replace the Affordable Care Act, commonly referred to as Obamacare.
The new bill would alter the way Virginia pays for the health care of its low-income and disabled residents. For decades, the federal government and the state have split the cost, but the bill proposes setting caps on how much the federal government would chip in, leaving states to pick up the tab or cut services.
State Sen. Emmett W. Hanger Jr., R-Augusta, who co-chairs the Senate Finance Committee, said the health care bill would result in cuts to services for people with disabilities, a significant tax increase — or both.
“There would be no way to come up with that kind of money without raising taxes, and we know how that works,” Hanger said. “Not likely, unless it was just a dire circumstance.”
It also would make it harder for Virginia to meet the requirements laid out in a 2012 settlement agreement with the U.S. Department of Justice over the state’s treatment of people with disabilities, experts said.
“It is fundamentally changing a 52-year partnership between the states and the federal government,” said Jamie Liban, executive director of the Arc of Virginia, which advocates for people with disabilities.
“These are people who are literally the most vulnerable citizens in the commonwealth, and we’re basically talking about slashing the budget that supports them.”
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While states that chose to expand Medicaid under Obamacare would face the largest financial losses under the AHCA, those states that did not expand — like Virginia — have a great deal of money at stake, as well.
As of 2020, Medicaid funding would be shifted to a per-capita cap model under the AHCA, meaning each state would get a chunk of funding from the government based on how many people are in its Medicaid program.
“The algorithm or formula they want to use really does not take into consideration some of our most expensive services,” Jones said.
The per-capita caps would be based on each state’s spending in 2016. Virginia ranks 47th in the nation on per-capita Medicaid spending, and its eligibility requirements are already among the strictest in the country, according to a pamphlet published this year by the Department of Medical Assistance Services.
“The main group that we can’t cover with the formula for per-capita cap are the seniors and individuals with disabilities who receive long-term care, any of our waiver services,” Jones said.
About 23 percent of the Medicaid population in Virginia drives 68 percent of the program’s expenditures. In 2016, the state’s Medicaid program cost $8.41 billion.
Children make up almost half of Medicaid’s total enrollment, but people with disabilities take up about half of its expenses, though they make up only about 17 percent of the enrollment.
Older adults make up 6 percent of the enrollment and 19 percent of the expenses.
Rick Mayes, a professor of public policy with the University of Richmond, noted that Medicaid beneficiaries in Virginia would not feel the budget constraints immediately since the changes would not be implemented until 2020.
“But in the longer term, five years out, this is going to increase cost to Virginia, and that’s when Virginia might revisit who they cover and what they cover,” he said.
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Some say that the per-capita cap would give states more flexibility to serve Medicaid beneficiaries.
“The Medicaid expansion in the Affordable Care Act has stretched the program beyond its original intent, denying support to those most in need,” U.S. Rep. Robert J. Wittman, R-1st, said in a prepared statement. Wittman voted in favor of the AHCA.
According to Mayes, historically, Medicaid was not meant to be as large as it is now.
“Medicaid is a lifesaver for an extraordinary number of people ... but we do, as a country, need to think about a fifth of the population being on Medicaid,” he said. “It wasn’t structured that way. It’s flexible, but any program has its limits.”
U.S. Rep. H. Morgan Griffith, R-9th, said the plan is meant to encourage states to be more efficient with their Medicaid spending — but that does not apply to Virginia.
“Virginia has been very efficient,” said Griffith, who also voted for the bill. “What we hope will happen is that those states that weren’t so lean will become much leaner.”
He said he shares some of Jones’ concerns.
“We need to make sure, as we move forward, that Virginia doesn’t get punished for having been a conservative state all along on its expenditures,” he said. “But we have to get the process started, and then we’ll see where we’re at. ... We’ve got to make reforms nationally to make sure we’re dealing with the situation from the national standpoint.”
In his statement, Wittman noted that, for non-expansion states like Virginia, “there are safety net provisions in place to provide additional resources so that Medicaid providers can continue to provide care to the uninsured and those on Medicaid.”
The $10 billion safety net provision — split among the 19 non-expansion states — is meant to last a five-year period — from fiscal 2018 to fiscal 2022 — and would be based on the total number of people in a state with incomes below 138 percent of the federal poverty level, according to the 2015 census.
When asked to comment for this story, U.S. Rep. Dave Brat, R-7th, refused to do so unless he was guaranteed three unedited paragraphs in the Richmond Times-Dispatch. Brat voted in favor of the bill.
Hanger, the state senator, said he doesn’t expect the bill to pass the Senate as it is now written — but if it did, the tax reduction Virginians would realize from cuts to the federal Medicaid contribution wouldn’t be enough to cover the state’s increased share of the program.
“Virginia won’t be alone on this when all 50 governors run the numbers and realize if that bill were to pass and become law, as passed by the House, it would basically put a lot of state budgets in distress,” Hanger said.
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The AHCA seems to starkly contrast with directives the federal government has been giving states relating to the treatment of disabled residents, experts said last week.
After a landmark Supreme Court ruling in 1999, Olmstead v. L.C., the federal government started pushing states to offer more community-based services so fewer people with disabilities were forced to live in institutions. In 2012, Virginia settled with the Department of Justice over its handling of disabled residents and agreed to make changes.
The process is supposed to be completed by the end of fiscal 2021.
More than 11,000 Virginians are on a waiting list for Medicaid waivers, which pay for services that range from intensive all-day nursing help to minor home modifications, such as wheelchair ramps.
“Nearly 3,000 of the people who are on the waiting list have been identified as needing priority 1 care,” Liban said. “So basically, what a per-capita cap would mean is that regardless of the crisis that those individuals are facing, help won’t be provided unless somebody else who has a waiver dies or moves away.”
Programs that started after 2016 — like the Addiction and Recovery Treatment Services benefit launched in April that substantially expands treatment for those with substance-use disorders in an effort to fight the opioid epidemic — would not be included in the per-capita cap model.
“It’s a shifting of the cost burden to the states to pick up more of the total tab of Medicaid cost,” Mayes said. “It will definitely be less than it used to be. States are going to have to limit entrance in the program and cut people off, they’re going to have to pay hospitals and doctors less, or cover less things.”
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