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Business groups divided over Virginia Medicaid expansion proposal

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Posted: Thursday, February 27, 2014 1:00 am

Virginia’s biggest business organization has embraced a private option plan for extending health coverage to hundreds of thousands of uninsured Virginians by using federal money intended for expanding the state’s Medicaid program.

But opponents led by House Speaker William J. Howell, R-Stafford, answered immediately with a news conference that featured the National Federation of Independent Business, an organization that led the legal fight against the federal health care law and has about 5,500 business members in Virginia.

The Virginia Chamber of Commerce presented an 11-point proposal this week that builds on the Marketplace Virginia plan included in the Senate budget as it hurtles on a collision course with the House of Delegates, which is resolutely opposed to any form of Medicaid expansion.

The state chamber, with 16,000 members and affiliates representing 30,000 businesses, put forth what it called “the business case” for taking about $1.7 billion a year in federal funds under the Affordable Care Act to provide coverage through a commercial, managed-care insurance marketplace.

“It’s about our people, it’s about our communities, it’s about our customers, it’s about the right thing to do,” said Kevin Reynolds, president of Cardinal Bank and past chairman of the Fairfax Chamber of Commerce.

But the NFIB presented an opposing view at the news conference with House GOP leaders.

“Not everybody in the business community thinks expanding Medicaid is a good idea,” said Nicole Riley, state director of the small-business federation.

The dueling news conferences represented an escalation in a high-stakes political battle that pits Gov. Terry McAuliffe and a Senate majority against what one opponent called a “supermajority” in the GOP-dominated House over some form of Medicaid expansion.

McAuliffe took the case for expansion on the road Monday with an appearance in Leesburg at Inova Loudoun Hospital, while House Republicans accused him of threatening a government shutdown on July 1 if a budget is not approved.

“He’s out basically grandstanding on this issue that has no business being in the budget,” said House Majority Leader M. Kirkland Cox, R-Colonial Heights.

McAuliffe spokesman Brian Coy said the governor is speaking to the people who would be most affected if Virginia fails to accept federal funding for health insurance that would offset federal cuts in hospital reimbursements. House Republicans are the “one group that has refused to come to the table,” said Coy.

Regarding the potential shutdown, he added: “We’re very hopeful we don’t have to consider that possibility.”

U.S. House Majority Leader Eric Cantor, R-7th, joined the rhetorical scrum with a brief appearance at the state Capitol. He praised House Republicans for “holding firm on stopping the expansion of Obamacare in Virginia.”

The real fight begins Wednesday, when the Senate and House will reject each other’s version of the two-year state budget that then-Gov. Bob McDonnell introduced in December. The chambers will then go to conference committee to hash out differences.

House Republican leaders say the Senate has threatened to extend the session beyond its scheduled adjournment on March 8 by including its plan for a private insurance marketplace in the budget.

“The question is why it is in the budget — it shouldn’t be,” said House Appropriations Chairman S. Chris Jones, R-Suffolk, who said the House and Senate budgets otherwise are about $40 million apart.

But the Senate proposal amends budget provisions approved last year by the Assembly to create the Medicaid Innovation and Reform Commission and empower it to authorize expansion — with a “sum sufficient appropriation”— if the state achieves sufficient reforms in its current Medicaid program.

Jones said reforms are not complete, particularly a third phase that would include managed care of Medicaid waiver services to people with serious disabilities, currently delivered through uncontrolled “fee for service” reimbursements.

The House budget would expand the number of slots for Medicaid waiver services by more than 800, but it also would begin to require coordination of services for some of those slots to manage utilization and control costs.

The Senate wants to continue reforms but authorize the secretary of health and human resources to seek federal approval of its Marketplace Virginia plan.

The plan would provide commercial insurance coverage for people who would be eligible for benefits in an expanded Medicaid program — mostly low-income parents and childless adults — and those who would shop for coverage on a benefit exchange run by a new division of the State Corporation Commission.

The plan includes a number of features the state chamber incorporated in its 11-point proposal, particularly a request for a federal waiver under Section 1115 of the Social Security Act to allow requirements that recipients work or seek work, share in the cost of their care, and promote preventive care and wellness.

The chamber added other wrinkles, most notably a requirement that the assembly and governor renew the private option plan every four years after an audit of its performance and costs. House Republicans passed a resolution requiring a two-year audit of the current program before expansion could occur. The resolution is pending in the Senate Rules Committee.

Chamber Executive Director Barry DuVal said the organization does not support expansion of traditional Medicaid benefits under the Affordable Care Act, but instead proposes a redesign of benefits to control costs and cut waste.

“The reforms we put forward we believe would require significant federal waivers but would meet the concerns of those policymakers who have reservations about the fiscal impact on the budget,” DuVal said in an interview Monday.

Howell and other House Republicans portrayed chamber officials as well-intentioned but misinformed.

“For whatever reason, they are not looking at the consequences of embarking on something as large as this,” Howell said. “They haven’t thought this plan through.”

DuVal and the state chamber were joined by representatives from local chambers of commerce across Virginia, including Kim Scheeler, executive director of the Greater Richmond Chamber, as well as officials for the Fairfax, Hampton Roads, Roanoke, Danville-Pittsylvania County, Asian and Hispanic chambers.

They expressed support for a private market option, not “straight Medicaid expansion,” which a state chamber poll showed that most members oppose, as do 81 percent of NFIB members polled in Virginia.

But DuVal said polling also found that that 60 percent of state chamber members supported a private market program that would recapture tax dollars already being paid by businesses under the Affordable Care Act.

With an estimated $16.4 billion in taxes on Virginia businesses over eight years, “our opportunity and challenge … is that we return $15 billion back to Virginia,” said Gary Thomson, chairman of the state chamber’s board of directors.

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