By Julian Walker

The Virginian-Pilot

RICHMOND

On a recent morning at the General Assembly, Del. Chris Jones dashed up to his fifth-floor office between committee hearings for what he thought was a quick meet-and-greet with some Hampton Roads constituents.

He instead found himself a bit back on his heels and at the center of a crowd urging him to support expansion of Virginia'sMedicaid system, the health insurance program funded with federal and state dollars.

"How can you close the door on more than 400,000 Virginians who need this health care?" one person asked Jones.

The Suffolk Republican told the group of about 30 people with Virginia Organizing that he's co-sponsoring a state budget amendment with that goal, provided the feds let Virginia make cost- containment reforms.

"I think we're more on the same page than not," Jones told the group. "We want to make sure, when we get there, we can afford it."

While the Medicaid debate hasn't been as high-profile as other legislative fights this winter, it looms as one of the more substantial policy decisions facing the legislature.

Program expansion is a key strategy under the federal Affordable Care Act to extend health coverage to millions of uninsured Americans. It's estimated that program growth in Virginia - primarily among adults who meet poverty guidelines - could provide coverage to as many as 420,000 of the state's 1 million uninsured.

A wrench was thrown into those plans when the U.S. Supreme Court in the summer upheld the health care act but ruled the federal government can't withhold funding from states that don't expand Medicaid. That leaves Virginia and other states with a choice: expand and draw down billions in federal support, or maintain the status quo.

Those making the case for expansion say the benefits are clear. They say growing the program would create about 30,000 new jobs in the health care sector - estimates differ among studies - and produce economic benefits for the state.

That's one reason health care and insurance lobbies are supportive of it; they also contend it makes good economic sense.

Expansion opponents question whether the debt-laden federal government can meet its commitment to cover the lion's share of new Medicaid enrollment from the health care act.

Medicaid is traditionally a 50-50 cost share between states and the federal government. To entice expansion, the feds pledge to cover 100 percent of coverage costs for those added for three years starting in 2014; that figure would later dip to 90 percent.

Much of the new population in Virginia would be adults, many of them childless, who meet poverty guidelines but aren't eligible for coverage now. Poor pregnant women, children, the elderly and disabled are among those who presently qualify for coverage.

Overall, Virginia isn't a particularly generous state when it comes to Medicaid. Despite having above-average per capita income, it's in the middle of the pack of Medicaid recipient spending and 48th among states in per capita program spending.

In fiscal year 2012, Medicaid expenditures, including federal money, totaled more than $7.4 billion; the $3.7 billion in state spending is more than one-fifth of the general fund budget, according to state data.

When he presented his budget amendments last month, Gov. Bob McDonnell highlighted the stress of Medicaid on finances, calling it "the second largest program in our general fund budget," one that has "grown exponentially" over the past 30 years.

The governor and some other Republicans are reluctant to expand the program without reforms from the federal government, such as making it more like private insurance, in which enrollees have a financial stake in their care.

In a December speech, McDonnell said the health care overhaul was an "expensive, bureaucratic, tax-raising and inflexible" program with many questions still unanswered more than two years after its passage. The governor didn't include money in his budget for expansion.

Yet legislators in the House and Senate have offered budget amendments and legislation to broaden Medicaid, sometimes with conditions attached, so it could end up in their versions of the budget.

The case for expansion goes something like this: In addition to being the humane thing to do, it benefits the state financially.

Various studies have projected benefits to the state in the coming years. One done on behalf of the Virginia Hospital & Healthcare Association estimated an annual benefit of roughly $4 billion for the next six years.

Another, by the Commonwealth Institute for Fiscal Analysis, figured the $2 billion in expansion-related revenue and savings Virginia would realize over eight years would dwarf the $1 billion in associated state expenses over that time.

Quantifying those savings, like many statistical exercises, depends on the numbers plucked to make a point. State estimates about Virginia's costs for Medicaid expansion over the next nine years have dropped significantly, from projections in excess of $2 billion to about $138 million, which reflect initial savings and rising costs in later years.

But that assumes an uptick in enrollment to around 69 percent of those eligible, roughly 275,000 new beneficiaries, said Health and Human Resources Secretary Bill Hazel.

Expansion has been a recurring theme this General Assembly session as a topic of various hearings, rallies and legislation.

Democrats have clamored for expansion, and some say Republican resistance is more about political spite than actual policy differences. However, some Republicans in the majority have offered a way forward on expansion.

Among them is Sen. Frank Wagner, R-Virginia Beach, who has offered legislation to expand the program with a caveat: The state could cancel its participation if the federal share of expansion costs fall below 90 percent.

Noting Virginians will pay new taxes under the health care act, Wagner reasons the state "ought to get some benefit" and return on investment. That money will go to other states if Virginia doesn't join up, he adds.

The ultimate goal of the health care act is to spread costs among more payers and lessen the strain of uncompensated care, on providers and on the insured through their premiums.

"In the insurance market, the more people who share costs the better," said Doug Gray of the Virginia Association of Health Plans. "That applies to government and the private sector."

Pilot writers Kathy Adams, Elizabeth Simpson and Bill Sizemore contributed to this report.

Julian Walker, 804-697-1564, julian.walker@pilotonline.com

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Medicaid expansion is a key strategy under the federal Affordable Care Act. Doing it in Virginia could provide coverage to as many as 420,000 of the state's 1 million uninsured. But some are wary of the cost.

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