Business groups urge adoption of private option for Medicaid expansion

Published February 24, 2014 by Robert Powell, III

Eighteen chambers of commerce throughout Virginia on Monday endorsed a private approach to Medicaid in Virginia. 

Led by the Virginia Chamber of Commerce, business leaders and chamber officials released a list of “free-market based principles” to guide reform of Medicaid, a state and federal funded health-care program designed to help the poor and disabled.

Medicaid expansion has been a divisive issue in the current session of the General Assembly. Democratic Gov. Terry McAuliffe has strongly backed expansion as a way to provide health care to low-income Virginians and stimulate the economy.

Under the federal Affordable Care Act (“Obamacare”), the federal government has pledged to pick up 90 percent of the states’ cost for expansion through 2017. That percentage then would gradually decline to 90 percent in later years.

The state Senate, controlled by Democrats, has adopted a budget that would use federal Medicaid dollars to finance a private insurance plan proposed by Republican state Sen. John Watkins. The plan would serve residents that would be covered under Medicaid expansion.

The House of Delegates, controlled by Republicans, has rejected Watkins’ plan and any expansion of Medicaid, saying the federal government could renege on funding its share, leaving the state with a bloated, inefficient program. House leaders held a news conference Monday with the National Federation of Independent Business, which represents 5,500 Virginia businesses, opposing the expansion of Medicaid.

The private option supported by business leaders was seen as a compromise proposal.

“The Affordable Care Act (ACA) has created uncertainty for the business community. Insurance premiums for Virginia’s businesses have risen 32 percent faster than the rate of inflation, in part because of the cost shifting due to the uninsured,” Gary Thomson, the chairman of the organization, said in a statement. “Over the next 8 years, Virginia businesses will incur $16.4 billion in ACA-related taxes to pay for federal health-care reform. A private option plan will allow Virginia to take control of $15 billion of its federal tax dollars and put them to work for Virginia businesses, taxpayers and communities.”

Reforms urged by the business organizations include:

• Privatizing Medicaid expansion in Virginia;
• Requiring the commonwealth achieve sufficient savings to offset the state’s share of contributions for the private option;
• Requiring enrollees to be employed or actively seeking employment;
• Encouraging a market-oriented approach for new enrollees to control their use of health-care services and maintain healthy behaviors, including cost sharing;
• Providing financial incentives to encourage healthy behaviors, including health savings accounts;
• Requiring an audit of the Medicaid program and a renewal of the private option plan every 4 years;
• Including language that the private option plan would terminate if the federal government fails to meet its financial obligations under the ACA;
• Supporting wellness and preventative services;
• Requiring annual performance reviews; and
• Expanding fraud and abuse prevention measures to control costs.