The Affordable Care Act presents all states with significant implementation challenges and opportunities, especially with regard to the Medicaid program. While Virginia’s Medicaid program has more stringent eligibility limits, better cost containment and lower provider rates than programs in many other states, costs of the existing program have consistently grown at rates in excess of state revenues over the last 20 years. Accordingly, simple expansion of the existing Medicaid program without additional state flexibility may not in the best long-term interests of the Commonwealth. However, a path forward on Medicaid that comports with Virginia’s traditional fiscal conservatism and is sustainable is very much worth considering. Such a plan for Medicaid would require broader state flexibility that allows Virginia to (i) reform and strengthen the existing Medicaid program; (ii) design a benefit package and delivery reforms better suited for a potential newly covered population of low-income able bodied adults; and (iii) take advantage of the health improvement and economic benefits from related federal funds.
To help policy makers as they grapple with these issues, VHHA commissioned Chmura & Associates to evaluate what the broader economic ramifications of the Commonwealth’s Medicaid policy choices would be. The results of that analysis are available here and we encourage you to review the results and assumptions carefully. As with many aspects of the Affordable Care Act and health care reform, the issues and financial ramifications are complex and will certainly be shaped by events going forward. However, the three most important findings of the analysis are clear:
Implementing the Medicaid expansion in Virginia would provide a $3.9 billion boost to the Virginia economy annually;
The related federal funds could support more than 30,000 jobs; and
While most of the direct benefits accrue to the health care sector, significant benefits would also be enjoyed by businesses and households.
Strengthening the existing Medicaid program and potentially extending coverage to an estimated 400,000 low-income adults has far reaching consequences that go well beyond what can be quantified in purely economic terms. As the default providers of care for uninsured individuals throughout the Commonwealth, Virginia’s hospitals and health systems know full well the impacts on disease progression and quality of life that delayed or forgone care due to lack of coverage can have. The health benefits of secure coverage are quite real as well. Nonetheless, we hope the economic benefits of a sustainable approach to Medicaid reform and potential coverage extension will prove helpful to policy makers and other interested parties.