Virginia could get stuck with a large bill

Sen. Emmett Hanger and I agree that Medicaid reform is the first step. But we disagree on the second step. Enacting serious reforms to Medicaid would make expansion slightly more palatable, but not necessarily easier to swallow.

The second and most critical step before Virginia considers expansion is guaranteeing that taxpayers will not get stuck with the bill.

Proponents of expansion have argued that “it would be foolish” for Virginia to turn down “free” federal money appropriated for expansion. But as the saying goes, there is no such thing as a free lunch.

Medicaid is considered mandatory spending by the federal government. That means no matter what it costs, the federal government pays for it — or rather, borrows money to pay for it. Expansion will be paid for the same way. The federal government has laid a blank check on the table and will just borrow whatever it needs to pay for it.

When a state chooses not to expand Medicaid, that money does not get spent somewhere else. It simply does not get borrowed and spent at all. A study recently quoted in the Wall Street Journal estimated if only half the states reject expansion, the federal deficit could be reduced by more than $500 billion.

If and when the federal government is forced to deal with its spending issues, and decides it cannot continue to cover the full costs of Virginia’s 400,000 new Medicaid participants, Virginia taxpayers will be stuck holding the bag.

Knowing that any money spent by the federal government is really just borrowed money, and knowing that the federal government has $16 trillion in credit card bills, makes it easier to understand why Virginia cannot rush into expansion.

Taking an IOU from Washington is almost never the responsible thing to do. Medicaid expansion is no different.

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