Medicaid Enrollment Reaches 1.5 Million Virginians

Annual year-over-year growth of Virginia Medicaid spending and enrollment. Eligibility expanded and provider reimbursements increased at the end of 2018. Source: Senate Finance Committee presentation. Click to view. 

By Steve Haner

Just under two years into Virginia’s Medicaid expansion, and less than one year into a pandemic-sparked economic crisis, enrollment in the program is now about 1.5 million Virginians. Enrollment has grown more than 25% in less than two years and spending more than 30%.

The financial impact on state taxpayers has been blunted by a COVID-19 related boost in the federal share of the program costs, which is expected to continue well into 2021. But the federal legislation providing the money also prohibited the state from removing recipients from the program unless they actually moved away. 

The Senate Finance and Appropriations Committee got an update from staff on the Medicaid program at its virtual “retreat” on November 19. Additional information is available from the Medicaid expansion dashboard still maintained by the Department of Medical Assistance Services (DMAS).

Beyond its importance as a very expensive and the fastest-growing state budget element, Medicaid will play a role in two other 2021 stories.

It will likely be a major issue in the contest for the Republican nomination for Governor, with Senator Amanda Chase of Chesterfield criticizing Republican colleagues who supported the 2018 decision to expand eligibility and provider payments. Those include former House Speaker Kirk Cox of Colonial Heights, who is running, and Senator Emmett Hanger of Augusta County, who may run.

Also, every household on Medicaid in the service territory of one of the two major electricity providers will be eligible for the new Percentage of Income Payment Plan. Their actual income or electricity costs will determine the benefit, if any, but being on Medicaid qualifies them for consideration. The electricity bill subsidies could be substantial.

Some of the important points from the November 19 briefing presentation:

  • Enrollment has grown more than 85% in ten years, from about 800,000 in 2011 to 1.5 million, far faster than the state’s population.
  • When the 2018 General Assembly approved Medicaid expansion, it was projected to add 378,000 recipients by now. Instead it has added 480,000, perhaps accelerated by the pandemic.
  • The maintenance-of-enrollment requirement imposed to receive the additional COVID funds added about $127 million in costs. How many recipients would otherwise have lost eligibility is not detailed.
  • Eventually, the enrollment growth may overcome the benefit from the COVID-19 enhanced federal share, leaving the state with net growth in costs. And the enhanced federal benefit is set to end in 2021.
  • If program growth continues into the 2022-24 period at just 6% per year (half the recent rate), another $1.1 billion in taxpayer general funds will be required.
  • Legislative decisions to increase the state minimum wage and create a new Medicaid dental benefit for adults will drive up costs in future years once fully in force.

Senate Finance Committee summary of provider assessments and the federal matching funds they procure.  Click to view.

The 2018 General Assembly approved two assessments on private hospitals, one to fund expansion and the other to cover higher payments for service to hospitals and other providers. In the first full year they were imposed, Fiscal Year 2020, they collected $602 million. It is projected to be just under $1 billion by FY 2022, and to exceed $1 billion the following year.

The money flows right back to medical providers with matching federal funds attached, providing what is expected to be net additional revenue for them of $1.9 billion this year and more than $2.2 billion in FY 2023.

Whether those hospital assessments are taxes or fees is debatable, but they will continue to grow rapidly and remain missing as an income item on most state budget summaries. At $1 billion-plus per year they will rank among the four or five largest state revenue streams.

As is usually the case, the committee presentation focused mainly on enrollment and dollars, with no attention paid to any improvements to the health of the population served. Even on the DMAS program summary, there is only rudimentary information on services utilized, still without any health metrics. It provides some “before and after” data on expansion but mentions different things, so is not a comparison (while it looks like one.).

It mentions that before expansion, 25% of Virginians used emergency departments for routine care, 25% spent more than $500 out of pocket, and 37% reported a health condition that prevented employment. So, two years into expansion with another half-million people covered, have those changed? Since expansion, 80% of that population has used at least one service, and two-thirds have filled at least one prescription. Is there actual evidence of better health? Wouldn’t that be good to know?

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13 responses to “Medicaid Enrollment Reaches 1.5 Million Virginians

  1. Good, objective, post. Thanks!

    What I would like to better understand is how Medicaid is actually funded in Virginia.

    How much comes from the Feds? How much is paid for with taxes paid to the state by Virginians?

    If I understand correctly (and I may not) – the part that is funded from the Feds is catagorized as Non-general funds but the part paid for by Virginians through income and other taxes is General Fund. Two thirds of the budget appear to come from other sources than income taxes on Virginians (I think).

    The Virginia Dept of Planning and Budget has an FAQ with pie charts:

    https://dpb.virginia.gov/budget/faq.cfm#wherefrom

    So how much is the total Medicaid Budget and how much of it do the Feds pay for? (realizing we pay the Feds taxes also)!

    • For some time I’ve wanted the Sec Finance to include a Medicaid-specific report in the monthly financials. Something similar to what is already done for the transportation funds, for the lottery, and the rainy day fund. It would track income and outgo by various categories. I advocated it here, and then face to face once with Secretary Layne. Something for the next governor to add….

      For what you just asked, take a look at this. I went and found it just for you: https://rga.lis.virginia.gov/Published/2020/RD72/PDF

      And now that I’m reading it, it is blowing me away. The total annual program is $15 billion, with just under $9 billion coming from federal funds. Yep, it is time for these numbers to be better known, a regular report focus. Usually all we see reported is the state general fund portion. Note that the cover letter says the data in this format is in response to a legislative mandate, meaning the report did not exist prior to that…

      Looking at the recent JLARC spending report, the total all-in Medicaid program is basically equal to VDOT and the Department of Education combined. Hmmm, $15 billion total cost, 1.5 million recipients, $10,000 annual per capita cost?

      • James Wyatt Whitehead V

        It is my understanding that the federal money that covers a large part of the expansion of Medicaid eventually diminishes and the state will have to pick up the tab. What year does that occur in? That will be the year of the next great tax hike for Virginians.

        • We never seem to get there. Congress always borrows more from the future to keep it going. I don’t see a Biden Administration reversing course. Even the COVID bump may remain, I betcha. As Larry (!) says, we pay federal taxes, too. 🙂

  2. Best in the world! You can get better healthcare and outcomes in other countries, but you can’t pay more for it.

    • So when are you emigrating? You can still participate in the blog.

      My wife worked more than 40 years for the federal government and one of her benefits is lifetime eligibility for federal employees health insurance. If I outlive her, I’m still eligible. We are covered by FEP Blue Cross/Blue Shield. We have Medicare Part A but no other Medicare programs. The extra premiums to add Part B are greater than the annual out-of-pocket maximum under BC/BS.

      My questions about Medicaid expansions are: In light of the coverage of people who would not otherwise have health insurance and would rely on so-called “charity care,” which is passed on to taxpayers and, to some degree, health insurance companies, how much has taxpayer funding for indigent care been reduced; and how much savings have private insurance plans saved?

      • Excellent questions for a real medical economist. Those who advocated for Medicaid expansion don’t seen terribly pressed to highlight the outcomes, now that they have what they wanted. Or they do know and it ain’t pretty….

      • What? And take a POC with me when I go, right?

        I bought about 8K of company stock in the 1980s. The annual dividend buys a $0, $0, $0 supplement policy and maybe half of a drug policy. The money in my HSA will cover any eye and dental. So, I don’t actually see any expenditures.

        But, since the country’s system is damned close to Switzerland’s in the use of a combination of government and private insurance with assistence where necessary, it’d sure be nice to do as well as they do in outcome and cost.

  3. Two crucial sets of questions are alluded to in the post and comments above but cannot be repeated often enough:

    (1) Have the public health benefits promised by Medicaid expansion in fact occurred, or have they fallen short? If they have fallen short, what else needs to be done? Is anyone even tracking and reporting on this? Does the Northam administration even care?

    (2) To what extent has Medicaid expansion inured to the benefit of Virginia’s hospitals and other providers? Have we see a decline in uncompensated care and charity care, what impact has that had on hospitals’ profits, and is there any evidence that hospitals have deployed increased profits to reduce charges? (I acknowledge that disentangling the effect of the COVID-19 epidemic will make these questions difficult to answer.) Is anyone even tracking this?

    All manner of claims and predictions were advanced during the Medicaid-expansion debate. It would be nice to know if the claims were justified and the predictions fulfilled…. or it it was a bunch of hokum?

    • employer-provided health insurance is heavily subisized by all taxpayers – even those that don’t have it and no complaints from those that have it!

      In terms of whether Medicaid “pays for itself” or not, couldn’t you ask the same questions for employer-provided insurance or even Medicare?

      Why do we only want to know the answers for Medicaid if taxpayers are also paying for employer-provided and Medicare?

      • Give me a break. Remember Mitt Romney and the 47% of Americans who don’t pay federal income tax. And what about public welfare benefits that aren’t taxable. And if employer funded (in part) health insurance benefits should be taxable, then too should be Medicaid. Unlike Medicaid, people with employer-provided health insurance earned what they have. They probably deferred gratification by getting college degrees, vocational training or apprenticeships, while many folks on Medicaid just made bad decisions.

  4. Steve,
    Agree, it’s a good blog post. Maybe this may be of interest from NBC:

    https://www.nbcnews.com/politics/politics-news/big-safety-net-affordable-care-act-filled-need-fended-dismantling-n1249149

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