Editorial: Bed tax would be a win-win for Medicaid expansion in Virginia

December 05, 2015

Republicans in Virginia refused to expand Medicaid and use federal funds to provide health coverage to 400,000 currently uninsured poor residents. Their rationale is that the expansion would imperil Virginia's long-term fiscal standing by leaving the state on the hook if the feds backed away from their commitment to handle no less than 90% of the $2.4-billion annual cost. Virginia hospitals have embraced a tax they previously opposed, this editorial from The Washington Post reports. The tax would be assessed on hospital revenue, which hospitals say they'd support if the funds yielded were earmarked for healthcare, thereby drawing down federal matching funds under Medicaid. The hospitals also insist that the state would commit to maintaining its planned subsidies for healthcare. For the hospitals, it means higher reimbursements for services rendered to Medicaid patients, which have fallen for a decade. For the state, it means extending coverage to thousands of uninsured residents, at no risk of short- or long-term fiscal impact, since the state would incur no new budgetary obligations. At a 2% rate, the hospitals would pay some $250 million, which would be matched by the same amount of federal funding under the existing Medicaid program, according to the Virginia Hospital and Healthcare Association. A 4% levy would yield $500 million from the hospitals, and more importantly trigger a windfall for the state under Obamacare's full Medicaid expansion - an estimated $2.7 billion annually in federal funds. That infusion of federal cash would extend coverage to uninsured Virginians, buttress the balance sheets of struggling rural hospitals, nearly half of which are losing money and provide a badly needed economic boost for dozens of stressed communities across the commonwealth. The Post says Republicans should support the plan, not least because it would mainly benefit residents in their own districts.