Hanger, Jones reach budget deal over Medicaid expansion in Virginia

A key senator who wants to expand Medicaid but has voiced reservations reached a compromise with a top Suffolk Republican delegate on Monday, potentially paving the way for a budget deal that includes Medicaid expansion.

State Sen. Emmett Hanger, R-Mount Solon, could get the votes necessary to pass a budget out of the Senate with a form of Medicaid expansion. However, a plan must go through the Senate’s Republican-controlled finance committee first, where he is not likely to find enough support.

The Senate meets at 3:30 p.m. Tuesday but there is still no scheduled time for the finance committee.

It appears that Hanger’s plan would be to propose amendments to whatever bill makes it out of the finance committee, according to documents attached to a letter that House Appropriations Chairman Chris Jones, R-Suffolk, sent to his House of Delegates colleagues about the deal.

Jones is the delegate who, over a week, hashed out a compromise with Hanger, according to his letter.

The budget deal — which looks similar to the original one passed by the House of Delegates — calls for a new hospital tax to cover the 10 percent cost of Medicaid expansion that the state is responsible for. This is something that Hanger has opposed. However, the proposal addresses one of Hanger’s key concerns: mental health.

The state would save about $280 million on Medicaid expansion coverage, so this proposal calls for spending $191 million of that money on behavioral health.

Behavioral health spending includes coverage for mental illness, substance use disorder, and intellectual and developmental disabilities.

Money collected from the hospital tax would be placed in a “lock box” so it can only be used for Medicaid costs.

The proposed budget compromise also includes boosting the state’s cash reserves — a key issue for bond rating agencies looking for Virginia to save more — to $975 million. It provides a 3 percent raise for teachers and a 2 percent raise for state employees, according to Jones’ letter.

“Our efforts were motivated by the unique circumstances we all face and the need to complete a budget in a timely manner,” Jones wrote. “We drew heavily on the work of the original conference committee to produce a package that reflects the priorities of both chambers.”

Hanger could not be reached for comment late Monday.

The Senate and the House could not reach a budget deal by their original deadline in March because the House wanted a version of Medicaid expansion, but a majority of the Senate did not. The General Assembly must pass a budget before July 1 or else the government shuts down.

The special session kicked off last month. The House again passed a new budget plan with Medicaid expansion but with a few tweaks and the same goal of expanding access to about 300,000 low-income Virginians. The Senate launched its special session just last week and has yet to propose a budget plan.

Hanger voted with his 20 other Republican colleagues to reject the House’s budget plan in March but mainly because of his dislike over the hospital tax. He later publicly committed to a budget that would have some form of Medicaid expansion, and state Sen. Frank Wagner, R-Virginia Beach, made a similar statement.

Wagner could not be reached for comment on Monday night. If both Hanger and Wagner support the deal revealed on Monday, they would have a majority supporting Medicaid expansion in the full Senate. But by normal procedure, the Senate Finance Committee would have to send a budget plan to the full Senate first.

State Senate Majority Leader Thomas K. “Tommy” Norment Jr., R-James City County, sits on the committee and does not support Medicaid expansion. In recent weeks, however, he has signaled that up to four Republican senators might be in support of Medicaid expansion.

Jeff Ryer, a spokesman for the Republican Senate Caucus, said senators will review the plan, “but for the overwhelming majority of Senate Republicans, Obamacare expansion remains a failed idea.”

According to the Richmond Times-Dispatch, Senate Minority Leader Dick Saslaw, D-Fairfax, who is also on the Senate’s finance committee, said last week that he is prepared to move to discharge the finance committee. That would allow the full Senate to consider the proposal on its own.

Hanger told the newspaper he does not want to resort to that, and that he wants the committee to pass whatever budget it wants. His amendments to the plan would come on the Senate floor.

The Virginia Hospital and Healthcare Association called Monday’s compromise an “important step forward.”

“As constructed, this is a fiscally responsible plan that returns Virginia tax dollars to the Commonwealth, promotes personal responsibility among beneficiaries, and includes essential safeguards to ensure that Virginia hospitals’ contributions help fund increased coverage, improve access to care, protect the stability of providers and our health care system, and will be used appropriately and only for designated health care purposes,” said Sean T. Connaughton, president and CEO of VHHA, in an emailed statement.

The Associated Press contributed to this report.