Who’s going to pay for this?
Per annum, Medicaid expansion is going to cost approximately $3.5 billion — 90% of which will be picked up by the federal government in a block grant where, if the feds walk back on their commitments, Medicaid expansion instantly ends (at least, should the compromise hammered out between Democratic Governor Ralph Northam and the Republican-led House of Delegates hold).
That leaves an extra $350mil to be picked up by… whom?
Now that the discussion about whether Medicaid expansion is in the cards seems — at least for the moment — to be resolved through the adoption of workfare requirements — a red line for progressives still apoplectic that Northam cut a deal with Republicans.
Make no mistake, like most compromises, the House compromise is not without its blemishes.
One potential issue is the House budget’s inclusion of former Governor Terry McAuliffe’s proposal to levy a massive tax on hospitals to cover state costs associated with Medicaid Expansion. As covered earlier this month, the McAuliffe proposal amounts to a nearly $1 billion ($932 million) assessment on hospitals over four years.
At the moment, the House plan retains the language introduced by McAuliffe, though it includes additional safeguards to limit the use of funds collected from a hospital assessment to specific health care coverage needs.
Such an extra layer of protection makes sense. But what remains worthy of further scrutiny is the question of whether a new tax is the way to go at all.
Remember that the Affordable Care Act already raised taxes at the federal level while the Commonwealth is projected to achieve millions in net savings from expansion over the next several years. If there is to be a tax, why should it apply to one industry? If coverage expansion is being done for the common good, one might reasonably ask, shouldn’t everyone have skin in the game rather than imposing a hospital bed tax?
The logic dribbles down. If we’re going to tax hospitals, what about pharmaceutical companies, and health insurers, and so on? For conservatives, this is a conundrum that requires some real introspection — and perhaps, a more creative solution.
Republicans are the party of tax cuts and level playing fields, not tax hikes and separate sets of rules. By those standards, the proposed solution that adopts the substance of McAuliffe’s $932 million hospital tax — while a great negotiation position for House budgeteers — will require further refinement indeed.