Twelve Reasons to Say No
Virginia got it right; Florida got it wrong.

Virginia governor Bob McDonnell


Avik Roy

While Florida governor Rick Scott has endorsed Medicaid expansion, Virginia governor Bob McDonnell has taken a different stance.

“Please understand that I cannot and will not support consideration of an expansion of Medicaid in Virginia until major reforms are authorized and completed, and until we receive guarantees that the federal government’s promises to the states can be kept without increasing the immoral national debt,” McDonnell wrote in a letter to the General Assembly’s budget chairmen.

Leading legislators, including Virginia house speaker Bill Howell, also have indicated they cannot support Medicaid expansion and are insisting on major reforms to the program, including giving states more control over spending and benefits. The final vote by the General Assembly is expected before adjournment this weekend, but Democrats are threatening to hold up transportation funding if Republicans don’t agree to expand Medicaid. Governors and legislators are waging similar battles in other states.

Here are twelve reasons Governor McDonnell is correct in his decision and Governor Scott is wrong.

1. Virginia’s Medicaid spending will explode.

According to a forthcoming publication from the Heritage Foundation, Medicaid spending will increase dramatically as the federal match rate for the expansion population begins to drop and as more and more Virginians enroll in the program – as the data from Heritage in this chart indicates.

2. Medicaid harms the poor.

The Medicaid program is so badly broken that it actually harms the people it is intended to serve. Mountains of clinical literature show that, on average, patients on Medicaid have poorer health outcomes than those with no insurance at all. The largest such study by far, conducted by surgeons at the University of Virginia, examined outcomes for 893,658 individuals undergoing major surgical operations from 2003 to 2007. It found that patients on Medicaid were 13 percent more likely to die in the hospital after surgery than those with no insurance, even when adjusting for age, gender, income, region, and health status. Medicaid patients were 97 percent more likely to die than those with private insurance.

This is because the Medicaid program pays doctors and hospitals far less than private insurers do. In 2008, the Virginia Medicaid program paid doctors 29 percent less than private insurers did. In California and New York, states with expansive Medicaid programs, Medicaid pays doctors 62 and 71 percent less, respectively. As a result, many doctors refuse to take Medicaid — and when Medicaid patients can’t get predictable access to care, their cancers go undiagnosed and their heart conditions go unmanaged. Access to specialists is particularly challenging. When Medicaid patients finally do get care, their diseases are often more advanced and more difficult to treat. This is worse than having no insurance at all, because uninsured people pay out-of-pocket, which doctors accept, compared with Medicaid, which underpays doctors and requires lots of form-filling and arguing. Virginia should instead insist that Washington provide more flexibility with Medicaid spending so that the Commonwealth can provide them the dignity of private insurance.