NFIB Tells Senate Panel Virginia Can't Afford Medicaid Expansion

Nicole Riley, Virginia state director of the National Federation of Independent Business, told the Senate Finance Committee today that small-business owners, employees and their families simply can’t afford a costly expansion of the state- and federally-funded Medicaid program.

Riley discouraged lawmakers from tying Medicaid expansion to the state budget and focus instead on improving the commonwealth’s existing health-care infrastructure.

“NFIB members understand the call by many to expand Medicaid and help the state’s poor, but doing so without meaningful reform would make it very difficult to balance our budget and would result in calls for higher taxes or slashing essential services,” Riley said. “We believe expanding an underfunded, cumbersome and poorly administered program like Medicaid would be irresponsible.”

Riley said, “Small-business owners are concerned that expanding Medicaid would come with a heavy fiscal burden at a time when our country is dealing with more than $17 trillion in national debt. Virginia business owners don’t want our state wandering down the same path.

“If Washington fails to keep its promise to continue funding this expansion, then Virginia will have to make tough decisions between keeping people on the Medicaid rolls and providing salary increases for teachers, benefits for our law enforcement officers and services to the mentally ill. Or, will the General Assembly just simply raise taxes to cover the shortfall?”

Riley rejected Governnor McAuliffe’s suggestion that the General Assembly could expand temporarily expand Medicaid then cancel the program in a couple of years if problems arise. “Our members find it highly unlikely that the General Assembly will take folks off of Medicaid once they are on the program,” Riley said. After all, she said, “They’ve been waiting since the end of the War of 1812 to see their BPOL [Business/Professional/Occupational License] tax repealed.”

NFIB/Virginia is the commonwealth’s leading small-business association, with about 5,500 dues-paying members representing a cross section of Virginia’s economy.

Good afternoon, I’m Nicole Riley, Virginia state director for the National Federation of Independent Business.

NFIB is Virginia’s leading small-business association with 5,500 dues-paying members. NFIB’s
member are who you’d consider Main Street Virginia. On average they have 10 or
less employees & represent all industry sectors – retail, manufacturers,
restaurants, and professional services. When deciding our positions on major
policy issues – NFIB ballots our entire membership for their opinion – so that
few don’t decide for the many. I’m here today to make it clear that not everyone in the business community supports Medicaid expansion in this year’s budget.

Since the inception of Obamacare, our small-business members have tried to prepare themselves for its impact on their business. What they’ve witnessed is a failed roll-out, cancelled health plans, and 38 delays or extensions to parts of the law’s requirements, creating a great deal of confusion and concern.

Our members have also seen double digit increases in their premiums. According to the IRS, since the passage of Obamacare, the average Virginia employee’s premiums have increased by 11.4 percent, while the average Virginia family’s premium has increased by 16.8 percent.

Now there’s talk of expanding Medicaid.

First, I want to make absolutely clear that everyone wants to make sure that those who need health care assistance have access to it as needed. What we’re talking about is the best way to achieve that—the best way to balance the medical needs of those who are financially less fortunate and the taxpayers who have to pay for government health care.

This is a complex issue that should not be rushed.

Our members believe there are a number of questions and considerations that need to be addressed before the Medicaid program is expanded.

1. We hear and read numbers of those who are not now covered ranging from 250,000 to 400,000. What is the accurate number and the cost associated with each amount? And aren’t some of those counted in this group already eligible for subsidies in the exchange? What happens if the number is actually higher than we anticipate?

2. The Marketplace Virginia proposal, as I understand it, is based largely on the Arkansas experiment that was initiated with great promise. However, recent reports indicate the program is not what it started out to be. The federal government changed or denied some of the waivers. The program is more expensive than projected, and now the state has decided not to reduce the numbers of those who are newly covered, so Arkansas is stuck. Does Virginia really want to follow Arkansas’ lead?

3. Governor McAuliffe suggested a two-year trial period and then canceling the program if Medicaid expansion does not work. Our members find it highly unlikely that the General Assembly will take folks off of Medicaid once they are on the program. They’ve been waiting since the end of the War of 1812 to see their BPOL tax repealed, and several cities that imposed meals taxes to pay for entertainment, economic development projects are still collecting those taxes long after the original project has been paid for. Given that history, our members are skeptical that the expansion will ever be rolled back.

4. There’s no argument from us that hospitals’ financial problems need to be confronted. However, if these hospitals are in financial difficulties because Obamacare cuts their current subsidies to pay for this new national program, then maybe Congress needs to “fix” this problem.

5. Finally, the ultimate question is this: Does anyone truly believe Washington will pick up 90 percent of new costs after 2020 in perpetuity?

Small-business owners are concerned that expanding Medicaid would come with a heavy fiscal burden at a time when our country is dealing with more than $17 trillion in national debt. Virginia business owners don’t want our state wandering down the same path.

If Washington fails to keep its promise to continue funding this expansion, then Virginia will have to make tough decisions between keeping people on the Medicaid rolls and providing salary increases for teachers, benefits for our law enforcement officers and services to the mentally ill. Or, will the General Assembly just simply raise taxes to cover the shortfall?

And
in regards to taxes paid by Virginia businesses: There are a number of taxes associated
with the ACA [Affordable Care Act, the federal health-care law]. However, they are not earmarked for specific spending programs in
the law. There is no Medicaid expansion tax or premium subsidy tax. The money
flows to the federal general fund with no guarantee states will reap the
benefits equal to the new taxes they pay. You don’t have to take my word for it. You can read today’s PolitiFact in the Richmond Times Dispatch.

NFIB members understand the call by many to expand Medicaid and help the state’s poor, but doing so without meaningful reform would make it very difficult to balance our budget and would result in calls for higher taxes or slashing essential services. We believe expanding an underfunded, cumbersome and poorly administered program like Medicaid would be irresponsible.

Let’s pass the two-year budget without any type of Medicaid expansion and then work through this issue as we see what pitfalls and successes other states experience before we commit Virginia to an uncertain fiscal future.

PHOTO: Varmin/Wikipedia