Virginia House and Senate budget plans are more than $600 million apart because of Medicaid expansion, cash reserve

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1 Virginia House and Senate budget plans are more than $600 millio... 27% 14% Virginia House and Senate budget plans are more than $600 million apart because of Medicaid expansion, cash reserve By MICHAEL MARTZ Richmond Times-Dispatch 11 hrs ago! " Del. Chris Jones, R-Suffolk, (left) chairman of the House Appropriations Committee, returned to his seat after presenting highlights of the House version of the state budget before the entire Appropriations Committee on Sunday. Del. Paul Krizek, D-Fairfax, (right) read over highlights of the House version of the state budget. Joe Mahoney/Times-Disaptch MORE INFORMATION The stage is set for a showdown between the House of Delegates and Senate over expansion of Virginia s Medicaid program, but the old roles have reversed in the five-year political battle. RTD Exclusive: The firewall against Medicaid expansion has fallen in the Virginia House of Delegates, budget proposal shows The House Appropriations Committee reversed course on its longstanding opposition to Medicaid expansion on Sunday by adopting a proposed budget that would accept more than $3 billion in federal funding to extend health coverage for more than 300,000 uninsured Virginians. The House plan, approved by a 20-2 vote, would seek simultaneous federal approval of reforms that would require Medicaid recipients to comply with work, education and 1 of 5 2/19/18, 8:47 AM

2 training requirements, as well as pay a portion of their medical expenses. The votes against the proposed budget were cast by Dels. Charles Poindexter, R-Franklin County, and Chris Head, R-Botetourt. Later Sunday, the Senate Finance Committee, which had led previous efforts to expand health coverage under the Affordable Care Act, adopted a proposed budget that would not accept the enhanced federal Medicaid funding for expansion, but instead would focus on improving services to people with mental illness and addiction, while bolstering the state s cash reserve. The Senate budget, which the Finance panel adopted unanimously, also laid out what it called aspirational goals for improving health care for a limited number of vulnerable Virginians. However, committee leaders acknowledged they have no way to pay for them because of a revenue hole of more than $421 million from the removal of Medicaid expansion, which then-gov. Terry McAuliffe had included in the budget he proposed in December. Senate Finance Co-Chairman Emmett Hanger, R-Augusta, who has led past efforts to expand coverage, acknowledged the decision does not please every member of this committee, but what I will say to you is that the conversations will continue on this issue and will not end here. Senate Minority Leader Dick Saslaw, D-Fairfax, voted for the plan but later issued a joint statement with Sen. Mamie Locke, D-Hampton, that called for the Senate to expand Medicaid. We need to rise to the occasion on the Senate side and join our colleagues in the House, they said. As it stands, we have serious concerns over the Senate version. The two chambers will act on the spending plans on Thursday and the differences will be hashed out in a conference committee of members from the two money committees in the final weeks of the General Assembly session, which is scheduled to end March 10. I think it s going to be a fascinating conference committee and I m really excited about it, said Senate Majority Leader Tommy Norment, R-James City, who also is co-chairman of the Finance Committee. Norment estimated the differences in available revenue between the two budgets at more than $600 million, primarily because of Medicaid, but also because the Senate proposes to put $180 million more than the House into a new cash reserve 2 of 5 2/19/18, 8:47 AM

3 fund. I think this is the most conservative budget I ve ever seen come out of the Senate since I ve been here, he said. Raises The result is a starkly different approach to spending in the next two years, especially for public employee salaries, K-12 and higher education. The House plan includes funding for accelerating 2 percent raises in the second year for state employees, teachers, and state-supported local employees such as sheriff s deputies. It also proposes an additional 1 percent in merit raises for state employees, as well as targeted pay increases for nurses and direct-care staff at state mental hospitals, correctional officers at adult and juvenile facilities, marine resource officers, and deputies whose primary duties are law enforcement, rather than running jails. The Senate plan includes another aspirational goal a 2 percent raise for state employees, teachers and statesupported local employees for the governor to consider in his next proposed budget if the revenue is available. The actions we propose today in areas such as employee compensation and higher education are painful, truly painful, but the committee believes they are in the best long-term interest of the commonwealth, Norment said in his opening remarks. Education In contrast, the proposed House budget includes major new spending on education from more than $91 million in additional dollars from the Virginia Lottery for local school districts to use as they please to $40 million to establish CyberX, a proposed higher education research initiative that Virginia Tech would lead from a Northern Virginia hub connecting to universities and colleges across the state. We were fortunate to have some additional revenue, House Appropriations Chairman Chris Jones, R-Suffolk, told reporters. Northam, Cox The House plan represents the most significant in a series of bipartisan agreements between Republican House Speaker 3 of 5 2/19/18, 8:47 AM

4 Kirk Cox, R-Colonial Heights, and Democratic Gov. Ralph Northam, who immediately endorsed the budget proposal for expanding Medicaid coverage as a historic step. I have long supported a simple and straightforward expansion of Medicaid, Northam said in a statement on Sunday. However, I respect the priorities of the House majority and I am encouraged by and supportive of our work together to bring about a new Virginia Way on Medicaid. The governor also acknowledged the plan s requirement that able-bodied Medicaid recipients engage in work, education, training or public service as a condition of their eligibility. We can and should expand coverage and provide significant training resources, counseling, and incentives to connect Virginians with employment opportunities, he said. I look forward to working with the House and Senate to finalize this proposal, ensure its passage and pursue an implementation plan that will provide the benefits of expanded coverage to Virginia families. Cox, who became speaker in January after Republicans lost 15 House seats in the November election, said the plan represents a compromise that embodies most of the six principles laid down by the GOP for its support of accepting enhanced federal funds for expansion. A lot of Republicans feel like the negotiations went very well, he said in an impromptu news conference after the committee vote. Jones, the principal architect of the budget plan, reminded the committee that the state had implemented numerous costsaving reforms to the Medicaid program since the annual legislative debate began in While some of you may continue to be hesitant about expansion, the fact is that the Affordable Care Act is here to stay, Jones said. Virginia has to live with that reality as to try to address our citizens health care challenges, and I believe the responsible approach is to put forward a plan to protect taxpayers and control costs as much as possible. The plan assumes savings of more than $371 million over two years by expanding the program on Jan. 1, 2019, rather than Oct 1, as McAuliffe had proposed. The state will propose an amendment to its Medicaid plan for approval by the administration of President Donald Trump, while beginning the process of seeking a federal waiver to allow the work-related 4 of 5 2/19/18, 8:47 AM

5 requirements and other conditions sought by Republicans as condition for expanding eligibility to childless adults and more low-income parents. We feel like the Trump administration wants to see reforms, Cox said. Democrats on the House committee said they are comfortable with the dual-track approach. I think the work requirement is very reasonable, said Del. John Bell, D-Loudoun, one of 10 Democrats on the committee to vote for the proposed budget. The House plan would rely on Virginia hospitals to pay a provider assessment or tax on inpatient revenues to cover the state s share of the costs of expansion. Hospital leaders were happy to see Medicaid expansion included in the budget to help pay for what now is uncompensated care, but they were disturbed by the House proposal to save $10.9 million by delaying a required inflation adjustment for Medicaid reimbursement rates to providers. While we applaud efforts by the House of Delegates, it is disappointing that proposed budget amendments would require hospitals to pay for the state s share of coverage expansion, and would do so without providing a corresponding update to Medicaid rates for hospitals as required by state code, said Julian Walker, spokesman for the Virginia Hospital and Healthcare Association. Earlier this week, Hanger said he would not support a bed tax on hospital revenues to pay for Medicaid expansion. I think it will be one of the most interesting conference committees we ve had in a long time around here, said Del. Mark Sickles, D-Fairfax. mmartz@timesdispatch.com (804) Michael Martz 5 of 5 2/19/18, 8:47 AM