Virginia Governor Adds Signature to Complaint Over Healthcare Mandates

Governor Bob McDonnell joined 33 governors and governors-elect in sending a letter to federal leaders today formally asking them to lift excessive constraints placed on state governments by healthcare-related federal mandates and detailing the costs associated with the mandates.   A copy of the governors’ letter is below:

Dear President Obama, Speaker Boehner, Senator Reid, Senator McConnell, Representative Pelosi and Secretary Sebelius:

As Governors preparing Executive Budget Recommendations for the upcoming fiscal year(s), we are writing to you regarding the excessive constraints placed on us by healthcare-related federal mandates. One of our biggest concerns continues to be the
Maintenance of Effort (MOE) provisions of the American Recovery and Reinvestment Act (ARRA) and the Patient Protection and Affordable Care Act (PPACA), which prevent states from managing their Medicaid programs for their unique Medicaid
populations.   We ask for your immediate action to remove these MOE requirements so that states are once again granted the flexibility to control their program costs and make necessary budget decisions.

Every Governor, Republican and Democrat, will face unprecedented budget challenges in the coming months.   Efforts by the United States Department of Health and Human Services (HHS) to regulate state operations impose greater uncertainty on our budgets for
oncoming years and create a perfect storm when coupled with the current state of the economy.   The National Governors Association (NGA) and National Association of State Budget Officers (NASBO) just last month released the annual Fiscal Survey of the States:

  • “Since the recession began, states have had significant revenue declines and in order to balance their budgets, have made significant cuts and in some cases enacted tax and fee increases. … Finally, the potential impact of health care reform in 2014 is a real unknown at this time.”
  • “Finally, one of the clearest signs of state fiscal stress are mid-year budget cuts as they highlight the difference between budgeted levels of spending and forecasted revenue collections. For fiscal 2010, thirty-nine states made $18.3 billion in mid-year budget cuts. Thus far for fiscal 2011, 14 states have made $4 billion in cuts. In 2009, 43 states cut $31.3 billion and in 2008, 13 states made $3.6 billion in mid-year cuts.”

Health and education are the primary cost drivers for most state budgets. Medicaid enrollment is up. Revenues are down. States are unable to afford the current Medicaid program, yet our hands are tied by the MOE requirements included in ARRA and PPACA.   The effect of the federal requirements is unconscionable; the federal requirements force Governors to cut other critical state programs, such as education, in order to fund a “one-size-fits-all‟ approach to Medicaid. Again, we ask you to lift the MOE requirements so that states may make difficult budget decisions in ways that reflect the needs of their residents. Attached is a fact sheet highlighting pending scenarios from many of our states as we cut services to meet the MOE requirements.     In these difficult fiscal times, we understand that the federal government cannot   provide new sources of taxpayer dollars to assist the states.   Therefore, our only option is to request flexibility and relief from MOE provisions so that we may responsibly manage our state budgets on behalf of our citizens.

The fact sheet referred to in the letter from the Governors included state by state facts that were relevant to the objections. Virginia’s Fast Fact section is included below:

The MOE requirements imposed by the federal government required Virginia to restore planned savings of almost $460 million.   This included increasing Medicaid eligibility level to 300 percent and requiring the state to lift a freeze on long term care waivers, in addition to other planned changes.

The MOE requirements prevent the state from changing the resource calculations for long term care as previously approved by the state legislature and Governor in an attempt to properly manage costs.   The federal requirements have hindered the Commonwealth’s ability to ensure that limited resources are directed to those most in need of public assistance.