Bill gets bigger in revised analysis of Medicaid work requirement

The estimated costs released Monday reflect the state and local expense of administering a work requirement that actively prepares people for employment and provides them support services. The estimate also includes the costs of continued public subsidies for uncompensated care of people who remain uninsured because of the hurdles of complying with ongoing state oversight, even if they’re working.

The new fiscal analysis didn’t sit well with House Speaker Kirk Cox, R-Colonial Heights, who said last week that the original analysis, with an estimated cost of $10.5 million in the first year and almost $26 million in the second, “doesn’t pass the smell test.”

“The speaker obviously disagrees with the new fiscal impact statement,” spokesman Parker Slaybaugh said in a statement. “Only in government math does taking people from welfare to work cost money.”

Administration officials also have included a “low touch” approach that would include less rigorous state and local oversight, cost less to administer and discourage fewer people from declining Medicaid benefits. They acknowledge the analysis is hampered by the lack of clear guidance on how to carry out a requirement that program recipients engage in some form of work or “civic engagement.”

“So we’re flying blind and developing this as we go,” said Deputy Secretary of Finance Joe Flores, a former deputy health secretary under then-Gov. Terry McAuliffe and, before that, a health policy analyst for the Senate Finance Committee.

The administration prepared the new analysis in response to House Republican leaders who accused it of inflating costs in the analysis last week. They consider the proposed work requirement essential before considering expansion of Medicaid to hundreds of thousands of uninsured Virginians under the Affordable Care Act.

The administration said it briefed House Appropriations Chairman Chris Jones, R-Suffolk, and his staff, as well as representatives of the Senate Finance Committee and Joint Legislative Audit and Review Commission on Monday morning. Jones asked JLARC last week for a formal fiscal impact review.

Federal dollars key

Appropriations officials said Monday that most of the costs — about $50 million a year — appear to come from employment support services for current and new Medicaid recipients, but the analysis assumes that no federal money would be available to help pay for them. Instead, it assumes the state general fund budget would pay about 85 percent of the costs and localities would pay 15 percent.

The report says the federal government doesn’t require those services so it likely wouldn’t pay for them, but Jones and his staff say the federal government provides most of the funding for Virginia’s workforce training programs, which are a major priority for Northam.

“I find it puzzling given the administration’s position on workforce training, there is not an acknowledgement of the federal dollars that are available to cover these costs,” he said.

The guidance for the analysis by the Department of Planning and Budget comes in part from the Virginia Initiative for Employment not Welfare, or VIEW, that the state established under Allen, a Republican who made welfare a principal issue of his 1993 gubernatorial campaign and a major part of his legacy as governor.

Currently, Virginia pays more than $35 million to administer the requirements of the program for fewer than 16,000 people who receive benefits through Temporary Assistance for Needy Families.

Jones suggested that program might have to change, too.

“The VIEW program has been in place for more than 20 years, and it makes sense to review the administrative cost,” he said, “especially if we are looking to provide training, education and employment services for the Medicaid population.”

‘Come to the table’

The fiscal analysis is based on legislation to apply a work requirement to the existing Medicaid program, but the issue has become a threshold challenge for Northam to win support from House Republicans who have thwarted proposals to expand the program for more than four years.

Slaybaugh, the spokesman for Cox, said the speaker “has been clear that we need to see the administration come to the table on reforms like this. It’s disappointing the administration seems to continue to throw up road blocks, rather than trying to find a productive path forward.”

Most of Medicaid’s roughly 1 million recipients in Virginia are children, pregnant women, elderly and disabled people, and caretaker parents with extremely low incomes.

The new analysis shows that the revised House Bill 338, proposed by Del. Jason Miyares, R-Virginia Beach, would apply to about 6,200 people in Virginia’s current Medicaid program, representing one of two caretaker parents in low-income households. Under recent federal guidance from the administration of President Donald Trump, only one parent could be exempt from the requirement, as would be other Virginians who are exempt under the work requirements for TANF.

However, the requirement would apply to almost 151,000 people. That’s almost half of the 305,000 Virginians that the state estimates would be covered by expanding eligibility for Medicaid benefits to anyone earning less than 138 percent of the federal poverty level, or $16,643 a year for a single person or $33,948 for a family of four.

The analysis assumes that 10 to 22 percent of those eligible would not participate in Medicaid because of burdens of the requirement, depending on how rigorously the state would administer it, both for people who are unemployed and looking for work, and those who are already working but have to continue verifying their employment.

The high end comes from the state’s experience with VIEW, which the analysis estimates would result in an additional 33,000 people who would remain uninsured and reliant on other forms of public care, such as emergency room treatment subsidized by the state and federal governments.

“High touch” approach

In the fiscal year that begins July 1, the “high touch” program would cost the state more than $51 million and local governments, which administer Medicaid eligibility and enrollment through their social services departments, more than $30.3 million. Those estimated costs would rise to almost $64 million for the state and $33.6 million for localities in the second year.

The “high touch” approach assumes the state and localities would provide “comprehensive case management, employment assistance and monitoring services,” the new analysis states.

However, the estimated cost of $2,300 a person is almost twice the rate in Indiana, which pays about $1,100 a person to assess their skills, provide training, help them search for work and track their efforts.

“Low touch” approach

The “low touch” approach “assumes a nominal amount of time” spent by staff members to provide minimal oversight of compliance with work requirements while relying instead on the individuals to verify they have met the requirements. Under this approach, fewer than 16,000 people would choose to remain uninsured and administration would cost about $53 a person each year.

Consequently, the estimated costs would fall to about $3.8 million for the state and less than $1 million for localities the first year, and $7.6 million for the state and $1 million for localities the second year.

The analysis says it could not estimate how those estimated costs would be spread among the local governments that administer Medicaid eligibility requirements. “However, it is necessary to acknowledge the impact of any additional responsibilities being placed on local (social services) departments and workers,” it states.