De-escalation: New VA governor drops Medicaid expansion from agenda

Democrats won a wave election in Virginia a month ago, not only winning the gubernatorial race but at least coming close to taking control of the legislature. Recounts are continuing in three races that could put Republicans in the minority, an astounding defeat for a party that assumed that they could maintain their position by doubling down on Donald Trump. Ralph Northam arguably has a broad mandate to pursue the Democratic agenda in the Old Dominion, but he tells the Washington Post that he wants to de-escalate the bitter partisanship first.

With that goal in mind, Northam has decided against pushing for the ObamaCare expansion of Medicaid, a key Democratic priority during Terry McAuliffe’s administration:

Northam said he has no plans to try to force Republicans to accept a broad expansion of Medicaid. Instead, he has begun talks with lawmakers in both parties about overhauling the state’s Medicaid system to expand access to health care while better defining eligibility to control costs.

Outgoing Gov. Terry McAuliffe (D) tried every year to push the legislature to accept millions in federal money to expand the health program to hundreds of thousands of low-income Virginians. Northam campaigned heavily on the promise of getting more Virginians access to health care.

He said Friday that he remains committed to that pledge, but that he must be careful about obligating the state to escalating costs. Under the program, the federal government pays the lion’s share in the early years but the state contribution gradually increases. “Medicaid is growing in Virginia by 5 to 7 percent, in that ballpark, every year,” he said.

“So I look forward to . . . seeing how we can provide better service and at the same time cut costs” through “managed-care Medicaid,” he said.

That may not count as a win for Republicans, but it’s at least a reprieve. The expansion costs will be considerable, an argument the GOP has made across the country, usually resulting in demonization from Democrats about a lack of empathy with the poor. The expansion, however, actually tends to crowd out the poor in favor of preferential treatment for those with more resources, a problem which Democrats usually refuse to acknowledge:

When Democrats decided to revamp the individual insurance markets in 2010 to reduce the number of uninsured Americans, they relied on an individual mandate to buy insurance and an expansion of Medicaid for those between poverty and the capability to pay for coverage. Millions signed up for the Medicaid expansion in states that chose to participate.

What impact did that have on the poor who needed core Medicaid? It shifted allocations of resources dramatically to those who earned more, as Charles Blahous noted two months ago. Per-person costs ran higher in the expansion group than in the core group, and the Center for Medicare and Medicaid Services now project that they will rise faster, too. “In other words,” Blahous concluded, “expansion has made Medicaid spending more poorly targeted. We’re already spending a far greater share than expected on Medicaid’s relatively less needy participants, and this poor targeting is expected to grow worse.”

That has another impact as well. The higher costs come from a greater utilization rate for services at Medicaid providers. However, the number of providers in the Medicaid network has not expanded to meet that demand, and in fact fell after the implementation of the expansion. Fewer providers serviced higher demand, which means that the poorer Americans that Medicaid traditionally covered have found it harder to access care, as the per-person costs for each group suggest.

Northam’s decision to slow the rush for expansion could mean that Republicans may have a partner in negotiations for broader reform. It might just mean that Northam is trying to go slow overall, too, but Northam is also unilaterally disarming in the partisan warfare in other ways, too. He tells the Washington Post that he will not attempt to manipulate the razor-thin legislative balances of power by appointing Republicans to posts within his administration, a strategy that offered Northam a potential path to single-party governance in Virginia.

Why not grasp for that? Northam says Virginians don’t want “showboating” after a difficult campaign:

After an ugly gubernatorial campaign ended in a surprising Democratic sweep that reverberated across the nation, voters don’t want showboating, he said.

“Virginians deserve civility,” Northam said Friday in his first extended interview since he beat Republican Ed Gillespie by nine points on Nov. 7. “They’re looking for a moral compass right now.”

Frankly, this might be the best for which Virginia Republicans can hope. The question will be whether Democrats allow Northam’s small-c conservative stance to hold for long. They will demand that he start delivering on his campaign promises and push for a more combative approach to Republicans in order to get it. In order to keep the progressive activists engaged, they will require some showboating sooner or later, and probably sooner.

Let’s hope Northam continues to resist the impulse, and that Republicans offer enough positive engagement to make it worth his risk. It’s not just Virginians who are tired of toxic partisanship for its own sake. Northam’s making the first concessions, and they’re substantial enough for his opponents to return the gesture in good faith. There will be plenty of time to get tough if Northam changes course.