BY MICHAEL MARTZ, OLYMPIA MEOLA AND JIM NOLAN Richmond Times-Dispatch
The House of Delegates will meet tonight to set up a state budget confrontation that has a new player in the game — Gov. Terry McAuliffe — while the Virginia Senate has left town.
McAuliffe moved Monday to take advantage of a rare opportunity for a first-year governor to introduce his own budget, including expansion of Virginia’s Medicaid program to provide health coverage to up to 400,000 uninsured people.
The governor’s budget proposal, encompassing 104 amendments and proposals for using an estimated $225 million in state savings from Medicaid expansion, rankled House Republican leaders who want to deal with Medicaid separately.
“I’m just disturbed by the process,” House Majority Leader M. Kirkland Cox, R-Colonial Heights, told Finance Secretary Richard “Ric” Brown. “Why are we getting this so late?”
Brown reminded Cox that the House Appropriations and Senate Finance committees did not give McAuliffe the opportunity to submit formal amendments to the two-year budget then-Gov. Bob McDonnell proposed.
“This is basically his first bite at the apple,” Brown told House Appropriations, which then rejected the governor’s proposal on a 16-5 vote.
The House will convene tonight at 7:30 to take up its own version of the two-year budget, which the Appropriations Committee approved by an identical 16-5 vote Monday. The House budget encompasses amendments made to McDonnell’s spending plan during the 60-day session that ended without agreement March 8.
The Democratic-controlled Virginia Senate adjourned Monday until April 7. That chamber’s Finance Committee will hold a public hearing on the budget April 2, at which it will review its current version and consider McAuliffe’s proposed amendments.
Senators said they want time for their members and the public to offer input.
The delay also pressures House Republicans by buying time to rally support for the governor’s Medicaid expansion plan and proposed 2 percent raise for all state employees and teachers, which would be financed in part by expected health care savings.
“I think the governor’s approach is spot-on,” said Sen. A. Donald McEachin, D-Henrico. “Not just Medicaid expansion, but it’s high time we helped out this committed group of public servants.”
House GOP leaders criticized the Senate for leaving Richmond, saying, “It is shameful and preposterous that Senate Democrats are leaving town at this critical juncture.”
Sen. Walter A. Stosch, R-Henrico, co-chairman of the Finance Committee, said he would have liked the process to move a little faster but wanted to hold a public hearing. He did not view the hiatus as an attempt to put pressure on House Republicans.
“I don’t think it’s overt pressure, I just think it’s a mechanical process.”
Both chambers on Monday passed a “caboose bill” to cover state spending through June 30, the end of the current fiscal year.
As lawmakers returned to Richmond for a special session, McAuliffe unveiled his proposed budget, which includes expanding Medicaid under a two-year pilot that he says could end at that time without financial penalty to the state.
Even supporters of the insurance program in the Senate were unsettled by McAuliffe’s decision to propose expansion of Virginia’s Medicaid program rather than Marketplace Virginia, which would extend private health insurance to Virginians without directly expanding Medicaid, using federal funds under the Affordable Care Act to pay premiums.
“It’s not what I hoped it would include,” said Stosch, one of three Republicans who backed the Senate plan for Marketplace Virginia. “I hoped it would be a private insurance option.”
Brown said the governor’s proposed budget would expand Medicaid on Jan. 1, 2015, as a two-year pilot that federal officials have confirmed the state could end without penalty. But he said the administration is open to how the insurance coverage is provided.
Administration officials say the state can amend its current federal waiver for managed-care insurance for more than 700,000 Virginians in Medicaid to accomplish most of the provisions of the Marketplace Virginia plan proposed by the Senate.
“You don’t have to have any additional waiver to do what we’re doing,” Secretary of Health and Human Resources Bill Hazel said in an interview Monday. “It’s basically a state plan amendment.”
McAuliffe said he would take responsibility for reversing the expansion after two years if the federal government doesn’t live up to its commitment to full funding.
He outlined what he termed “significant changes” to the McDonnell budget, with more than $425 million embedded in the 104 proposed amendments, including a 2 percent raise for state workers and teachers.
McAuliffe said accepting about $2.2 billion in federal funds would save the state $1.1 billion by 2022, including $225 million over the next budget biennium. Most of the savings would be spent in the second year of the budget.
Cox, in one of seven Medicaid expansion speeches on the House floor, said McAuliffe is wrong to link health insurance coverage to the state budget, which is crucial to decisions on local government budgets and tuition rates for public colleges. A number of localities have adopted resolutions asking the state to decouple the issue from the budget, he said.
“The message is: clean budget now.”
McAuliffe sidestepped a question on whether he would sign a budget that did not include provisions for accepting the money.
“There is nothing clean about sweeping under the rug 400,000 Virginians who are counting on us to provide coverage.”
Brown said $100 million of the savings would go into the Virginia Health Reform and Innovation Fund created in the budget last year to bank savings in the early years of expansion. An additional $76 million is proposed as a hedge against declining revenues that could otherwise be used to fully fund pension liabilities for state employees in the second year of the budget. The House budget includes the same provision.
The governor’s amendments also include $8.9 million for mental health, $7.4 million for prekindergarten and $4.8 million for extended school year grants, as well as $17 million in line-of-duty funding for benefits to state employees, local government employees and volunteers who hold specified hazardous duty positions.
House Appropriations Committee Chairman S. Chris Jones, R-Suffolk, contends half of the estimated 400,000 Virginians who would be eligible for coverage could buy insurance in the new federal marketplace with premium tax credits and other subsidies because they earn above 100 percent of the poverty level, $23,550 a year for a family of four.
He also said the state “can’t unwind” the insurance expansion after two years, despite federal regulators’ written assurance to McAuliffe. “He has a letter from someone in Washington, not someone here on the ground,” Jones said.
Cindy Mann, director of the Centers for Medicare & Medicaid Services, made clear in the letter that Virginia could withdraw from the expanded coverage after two years with “no financial penalty and no reduction to the federal matching dollar rates otherwise available to Virginia for its Medicaid program.”
McAuliffe’s proposal to redirect state savings from using the federal funds won praise from representatives of state employees who would benefit.
“It has been a rough few years,” said Jim Roberts, a lobbyist for the Virginia Governmental Employees Association, which supports the budget proposal.
“This is encouraging.”
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