General Assembly Update
The recent ruling by the U.S. Supreme Court that the Patient Protection and Affordable Care Act (PPACA) is constitutional has answered one question, but it is clear for state governments, employers of all sizes and their employees, as well as healthcare providers that many questions remain unanswered. Although the General Assembly is not currently in session, members of both the legislative and executive branches are working to review the impact of the Court’s ruling and to ask questions that must be answered to understand how best to move forward.
In the last week, legislators received a letter from Governor McDonnell along with correspondence that he is sending with other Governors to the President and the Secretary of Health and Human Services seeking answers to many issues that are not today clear in either the federal legislation or subsequent federal guidance. Additionally, we have received a briefing from Attorney General Cuccinelli that provided both legal and fiscal insights.
One of the more critical decisions Virginia will have to make is whether to expand its Medicaid program. The Supreme Court said that the federal government cannot penalize states by withholding existing Medicaid dollars for declining to expand Medicaid. Under the current program, Medicaid spending has grown from 5% to 19% of the state budget over the last three decades. The federal government has offered to pay 90% of the cost of the expanded program, but even a casual observer is skeptical that the federal government can provide this level of funding for the life of the program.
During the 2012 General Assembly session legislation was introduced to establish a state-based health benefits exchange. That legislation did not move forward in advance of the court’s ruling and a number of uncertainties and variables still exist that make it difficult to know if a state-based exchange is good policy and what the long term operating cost to the Commonwealth will be. Planning and forecasting can and should continue in advance of the 2013 General Assembly session.
Mitt Romney has said that he will repeal PPACA if he is elected. President Obama said three years ago that it is not sufficient to simply add more people to Medicare or Medicaid in the absence of cost controls and reform. The President said, “We can’t simply put more people into a broken system that doesn’t work,” but that feels like exactly what we are doing. The upcoming election is evidence that all of the questions about healthcare have not been answered with the Supreme Court’s ruling. The flexibility for states to manage their Medicaid program remain elusive, but its potential along with innovations in the healthcare field that focus on outcomes rather than procedures, have the potential to improve healthcare without breaking budgets.
