RICHMOND
Virginia's lack of budget and proposed Medicaid expansion has become a chicken-and-egg dilemma that threatens a state government shutdown - imperiling schools, law enforcement and other public services.
The conflict: whether or not budget negotiations should include a proposal to give subsidized health care to hundreds of thousands of Virginians in the "coverage gap."
Democrats maintain that, as policy items, the budget and Medicaid are tied together, while Republicans say they are two distinct entities and warrant individual attention. Each maintains that fiscal sanity is on their side.
With partisans in each group wedded to their positions, the General Assembly special session starts today. A look at the issues surrounding the Medicaid-budget debate:
What is the coverage gap and who's caught in it?
The Affordable Care Act includes two ways of extending health insurance to uninsured, lower-income people.
First, private plans sold through government-run marketplaces offer assistance for people in households making between 100 and 400 percent of the federal poverty standard.
Second, states are allowed to expand their Medicaid programs by extending eligibility to most people in households with incomes up to 138 percent of the federal poverty level. The federal government would pay the full cost of expansion through 2016, then gradually phase down its contribution to 90 percent by 2020.
If a state doesn't elect to expand Medicaid, uninsured people who are ineligible for existing Medicaid in households below 100 percent of the poverty standard fall in the "coverage gap." That's because they can't get government help buying a plan in the marketplace, but they also won't get insurance through expanded Medicaid.
Who benefits if Medicaid is expanded?
Low-income, childless adults; some low-income parents; and adults in families with children older than 19 become eligible for Medicaid under the expansion. As many as 400,000 Virginians could benefit, including an estimated 47,000 in South Hampton Roads.
State officials estimate enrollment of 247,900 out of the 359,300 individuals eligible under the proposed "Marketplace Virginia" private alternative to outright Medicaid expansion.
Why is Medicaid expansion optional for states?
Because the U.S. Supreme Court decided so. In its 5-4 ruling from June 2012, the high court upheld the bulk of the Affordable Care Act, including the constitutionality of a mandate that most Americans have health insurance or face a tax penalty. However, justices in the majority said states couldn't be forced to expand their Medicaid programs under threat of losing matching funding.
How does the state Medicaid system operate and who does it serve?
As of Feb. 1, more than 998,600 people were enrolled in a state Medicaid-related program. That population includes aged, blind and disabled individuals, pregnant women, some parents of dependent children, and children who meet eligibility standards.
Virginia's Medicaid system is generally a 50-50 cost split between state and federal dollars used to reimburse care providers. Virginia ranks 46th nationally in per capita Medicaid spending.
How is expansion proposed in Virginia?
Rather than increasing the Medicaid rolls, a state Senate majority and Gov. Terry McAuliffe have endorsed a plan to set up a private health insurance marketplace through which new enrollees can obtain coverage.
Supported by federal funds, that model would achieve the effect of expansion in a fashion more palatable to some influential private business interests.
What are health insurance marketplaces?
The health care law established hubs - mostly online - where people can buy private plans meeting certain standards in the individual and small-group markets. The federal government supports or fully runs the marketplaces for Virginia, North Carolina and 34 other states through healthcare.gov.
Five months into the six-month open enrollment period, about 102,800 Virginians and 200,600 North Carolinians had selected plans through the marketplaces.
What's at stake?
The survival of hospitals, health care affordability and Virginia's economic health, according to Medicaid advocates. Opponents of expansion say the state's finances - especially if a debt-ridden Washington fails to make good on its funding pledge - and the fiscal health of localities reliant on state budget support of its operations would suffer.
Additional reluctance comes from the fear of growing an already large program without auditing it for waste, and concern that Virginia won't be able to opt out if something goes wrong.
Obstinance on both sides has prevented passage of a two-year, $96 billion state budget. Anticipated Medicaid expenditures over the biennium account for $8 billion, or about one-fifth of Virginia's general fund budget.
Hospitals are desperate for a Medicaid accord because they face funding cuts under the ACA, which were intended to be balanced by federal dollars funneling back to hospitals through the expansion and insurance paying for patients who in the past relied on charity.
How did we get here?
Virginia has been a central figure in the ACA debate since March 2010, when then-Attorney General Ken Cuccinelli became one of the first litigants to legally challenge President Barack Obama's signature health care plan after it was signed into law.
But what brought us to this point was legislative action last year when Senate Democrats insisted on Medicaid expansion language in the budget as a condition of approving the landmark transportation funding package.
What resulted was a new legislative panel - the Medicaid Innovation and Reform Commission, which is empowered to seek cost-control reforms and decide on expansion. Partisan disagreement kept that commission from recommending a path forward heading into this year's General Assembly session.
What's next?
The legislative special session starts today. McAuliffe will introduce an amended budget that's expected to include Medicaid expansion language and 2 percent pay raises for all full-time state employees and teachers, as opposed to the House Republicans' plan, which offers a 1 percent bonus for most state workers in the budget's first year and a 1 percent raise in the second year. After a series of procedural moves between the House and the Senate, budget legislation will be sent into small group negotiation sessions, where select lawmakers will seek to hammer out a compromise.
Then it's a staring contest to see who blinks first.
Meanwhile, local governments that rely on state support are waiting to establish their own annual spending plans. House Republicans say delayed action on the budget puts localities at risk, and they note that at least 17 have urged state lawmakers to pass a budget that treats Medicaid as a separate issue. Chesapeake and Virginia Beach are among those that have adopted resolutions with that purpose, even though Mayor Will Sessoms supports addressing the "coverage gap." He is one of seven mayors from South Hampton Roads and the Peninsula who has taken a pro-Medicaid-expansion stance.
Virginia has had budget standoffs before, most recently in 2012. The one in 2006 wasn't resolved until late June, days before the new budget year was to begin.
Julian Walker, 804-697-1564, julian.walker@pilotonline.com
Amy Jeter, 757-446-2730, amy.jeter@pilotonline.com