Virginia weighs provider tax to fund Medicaid expansion
- As Virginia lawmakers debate Medicaid expansion, some are suggesting that nonprofit hospitals be taxed to pay for it, the Richmond Times-Dispatch reports.
- The state House plan calls for billions in federal dollars to expand Medicaid coverage plus a provider tax to help shoulder the state’s share of the costs. The tax was originally proposed by three nonprofit health systems, which saw it as a trade-off in the struggle to pay for charity care.
- Virginia’s proposal also includes a “kill switch” if the federal share dips below 90%, delmarva now reports. And it includes strict work requirements. The state government needs to approve a budget before July 1 to avert a shutdown.
Virginia is at its closest point to expanding Medicaid, and it’s an interesting twist in how states can fund such a move. Under the Affordable Care Act, states can expand Medicaid to provide benefits for low-income adults up to 138% of the federal poverty level.
Some studies find that Medicaid expansion improves population health. In a recent America’s Health Insurance Plans study, adult Medicaid beneficiaries were nearly five times more likely and children four times more likely to have a “consistent source of healthcare” compared to those without Medicaid. Not only did Medicaid increase access to healthcare, but adults and children enrolled in the program were more likely to receive preventive care services as well.
However, states are increasingly looking at restrictions like work requirements and mandatory premiums to cushion their costs of expanding the program. In January, Kentucky became the first state to impose work requirements for people enrolled in Medicaid under a policy shift by the Trump administration. Many states that have resisted Medicaid expansion in the past are now considering doing so, hoping it will move more people off Medicaid and into the workforce. Research has shown, however, that most Medicaid beneficiaries already work.
Another contentious topic is how much community benefit hospitals should be required to provide to justify their tax-exempt status. While the ACA included provisions encouraging nonprofits to increase community health benefits, a Health Affairs study found only modest changes in investment.
Between 2010 and 2014, average spending on community benefits by tax-exempt hospitals grew slightly from 7.6% to 8.1%. Most of that increase went toward charity care and not broader community health initiatives, according to the study.
If Virginia approves Medicaid expansion, it would join 33 other states that have broadened their programs. Maine lost its chance to expand the program this year when Gov. Paul LePage missed last month’s deadline to present an expansion plan.