How Medicaid Is Cannibalizing Virginia’s Budget

Source: JLARC

Three big trends are worth noting from the Joint Legislative Audit and Review Commission 2017 state spending update, a review of state spending over the previous 10 years.

First, General Fund spending has been constrained by limited revenue growth resulting from Virginia’s weak economy. The increase in spending has averaged 2.0% per year. Adjusted for inflation and population growth, General Fund spending actually declined 1% over the decade.

Second, the Medicaid program has crowded out spending for other priorities. Medicaid hogged 60% of all General Fund revenue growth over the decade. Medicaid’s share of the General Fund pie increased by 73%.

Third, the healthy growth in non-General Fund spending was driven in large part by tuition increases at Virginia’s colleges and universities. In other words, when faced by stagnant revenue and untouchable Medicaid spending increases, legislators cut what was cuttable. They reduced state support for higher education knowing that colleges and universities could fall back upon the expedient of raising tuition.

Cheerful thought of the day: As Virginia’s population ages, Medicaid spending will go one way — up — and it will continue to squeeze other spending categories. Here’s the spin that Republican legislators put on the JLARC report:

House Speaker William J. Howell, R-Stafford: “Once again, this annual report from JLARC shows that the increasing cost of Virginia’s current Medicaid program is crowding out needed funding for our public schools, colleges and universities, roads, and law enforcement officers. We consistently argued that Virginia can barely afford its existing Medicaid program, let alone the massive cost of expansion, and this report vindicates that position.”

Speaker-designee Kirk Cox, R-Colonial Heights: “It’s a simple proposition: if you cannot afford your mortgage payment, you don’t build a new addition to your house. Virginia’s current Medicaid program covers around 1 in every 8 Virginians, and as this report shows, the costs are staggering and continue to climb, despite ongoing reform efforts. It would be financially irresponsible to ask taxpayers to fund the massive expansion contemplated under the Affordable Care Act.”

Del. S. Chris Jones, R-Suffolk: “Even as we instituted major reforms aimed at bending the cost curve, and controlled spending growth in other areas of state government, Medicaid costs continue to increase dramatically. This growth eats into funding that could be used for our teachers, law enforcement officers, and hard working state employees.”

Bacon’s bottom line: Yeah, the Republican leaders are stingy bastards for not expanding Medicaid. But the alternative is worse. Latest news on the Boomergeddon front: The state of Illinois, which expanded its Medicaid program in 2013, incidentally, and now has to cover 10% of the expanded costs not funded by the federal government, has $16.5 billion in unpaid bills. The state also has $200 billion in total liabilities, including pension debt. Meanwhile, pundits are asking if debt-ridden Chicago will become the next Detroit. One good recession, and it will be.

To see what it’s like to operate a government bordering on insolvency, watch Puerto Rico flail as it tries to recover from Hurricane Maria. It’s not a pretty picture. It’s easy to be compassionate when you’re paying with other peoples’ money. When other peoples’ money runs out, everything goes all to hell.

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One response to “How Medicaid Is Cannibalizing Virginia’s Budget”

  1. LarrytheG Avatar

    MedicAid is voluntary to the states.. and the problem is that MedicAid works similar to the Virginia SOQ funding for schools in that Virginia provides funding and the rules and the local school districts have to match the state money and follow the State’s rules.

    Similarly the Feds provide MedicAid money , the state has to match it – and the Feds decide the rules for what it can be spent on – and not.

    In order for Virginia to get out of MedicAid- they’d have to give up the Feds share of the funding and be all on their own which would put them even deeper in the hole but they’d be able to downsize because they’d be making the rules.

    The question is what would they downsize since MedicAid consists mostly of kids/Moms , handicapped and disabled and he elderly in nursing homes.

    If Va was on it’s own, would it be able to cut Medicaid so it was not such a drag on the budget?

    I doubt it seriously.. we’d still have the same problem with Medicaid “crowding out” other needs but we’d no longer be able to blame the Feds..we’d just have ourselves …

    and that actually may happen if Congress converts MedicAid to block grants that will reduce over time .. to zero..

    Even if the Feds gave a “rebate” to taxpayers for the 500 billion reduction – it would not go to the states.. they’d have to levy taxes on Virginians to get it back!

    That would be an interesting quandary for the GOP in Virginia…

    so their time remaining for blaming the Feds and Liberals might be dwindling…

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