Ken Plum: Chicken and the egg

kenplum2A chicken or egg kind of debate has been going on in Virginia recently as a result of a report from the Joint Legislative Audit and Review Commission (JLARC). The agency is charged by law with the responsibility of providing an annual report on the growth of state spending over the last ten years while identifying the largest and fastest growing programs and functions in the budget. The most recent report was for the period FY 2006 through FY 2015. Among its other findings was the fact that the Department of Medical Assistance Services (DMAS) has overtaken the Department of Education (DOE) as having the largest appropriation of any state agency. The appropriation for DMAS represents 18 percent of the total state budget with DOE being 15 percent, Virginia Department of Transportation at 10 percent, and all the other agencies of state government at under 10 percent each.

The largest program increase in total appropriations from FY 2006 to FY 2015 was in the area of medical program services (Medicaid) from $4,672.8 million to $8,148.6, an increase of 74 percent. Some opponents of an expansion of Medicaid have focused on this number as being a reason to not expand Medicaid for presumably it would cost too much.

Fortunately the Commonwealth Institute for Fiscal Analysis has done some research that puts the increase in context. As the Institute points out, “the growth occurred largely during the worst and most prolonged economic recession since the Great Depression and then a sluggish recovery made worse by federal sequestration. Most recently, Virginia ranked 48th nationally in economic growth. When you lose your job, you lose your health coverage if you were lucky enough to have it in the first place. At the same time, the number of Virginians 65 years and older grew more than three times as much as the overall population resulting in a 30 percent increase in enrollment.”

Beyond these external factors affecting Medicaid costs, state legislators added more than 4,300 waiver slots over the past ten years for long-term care services for people who are intellectually and developmentally disabled. These waivers that are critical to the individuals and families who need them are among the most expensive of medical services. An intellectual disability waiver costs about $71,000 per person per year, and a developmental disability waiver costs nearly $33,000 per person per year. The Institute found that last year alone the waivers added $285 million to the budget. Waivers are not limited to persons of low incomes as the rest of Medicaid programs are.

Is it then the chicken or the egg that came first? Did the availability of medical services run up the cost of Medicaid or was it the growing population of older persons and the extension of services to the most needy that added to the cost? In either case, does it not make sense to use 100 percent federal dollars to meet the needs of the working poor and save the 350 million state dollars that are currently appropriated for the indigent? People who need health care come first making an expansion of Medicaid essential.

Ken Plum is a member of the Virginia House of Delegates.

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