Speaker Howell says Virginia's Medicaid costs went up 1,600 percent over 30 years

House Speaker William Howell says Virginia should rein in the ever-rising costs of Medicaid rather than expand the program to cover 400,000 additional low-income Virginians.

Howell, R-Stafford, staunchly opposes Gov. Terry McAuliffe’s goal to broaden the state’s Medicaid program as part of Obamacare. The speaker, in a January 5 op-ed in the Free Lance-Star in Fredericksburg, wrote that Medicaid is rife with waste and fraud and in dire need of reform.

"Medicaid has grown by 1,600 percent in the last 30 years," Howell wrote.  

Howell was referring to the cost of Virginia’s Medicaid program -- an expense evenly split between the federal government and the state.

We’ve heard the figure he cited before. Former Gov. Bob McDonnell used it repeatedly in explaining his reluctance to expand the program. Under Obamacare, the federal government would pay all the costs of the new enrollees’ health care until 2016, and eventually, 90 percent from 2020 and beyond.

We wondered whether the 1,600 percent growth figure is correct.

Matthew Moran, a Howell spokesman, pointed us to data from the House Appropriations Committee showing the total of state and federal funds budgeted for Virginia’s Medicaid program was $455 million in 1984 and projected at $8.1 billion this fiscal year. That’s a 1,683 percent increase.  

We also sought Medicaid spending figures from the Virginia Department of Medical Assistance Services -- the agency that administers Medicaid, which now covers about 1 million Virginians. We got somewhat different numbers.

Craig Markva, a DMAS spokesman, said his agency estimates Medicaid costs increased by about 1,400 percent over the thirty-year period. Why are the numbers different?

Markva noted that DMAS was formed in 1985 -- one year after the starting date for Howell’s claim. Prior to that, he said some Medicaid expenses were pooled with costs of other health programs in the state budget. DMAS estimates the 1984 Medicaid price tag was $531 million -- some $76 million above the committee figure the Howell used.

Either way, it’s a huge increase. Markva said policy makers started using the 1,600 percent figure a few years ago and, back then, it was undisputedly accurate. Between 1980 and 2010, he said, DMAS estimates Medicaid rose by 1,650 percent.

What caused this tsunami?

Inflation played a big part. The 30-year figures cited by Howell and the House Appropriations Committee fall to a 694 percent increase in Medicaid costs when adjusted for inflation.

DMAS, in a report last June, said rising healthcare costs and greater use of services accounted for most of the increased costs in the state’s medicaid program between 1990 and 2012.

Growing enrollments also pushed up costs, according to DMAS. There were 300,000 enrolled in the program in 1990 and that grew to 1 million in 2012.

Enrollments have risen for a couple of reasons, Markva explained.

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"Some of this was simply population growth," Markva said in an e-mail.

Also contributing to the surge were federal laws that significantly expanded the population eligible for Medicaid, Markva said. The state contributed to the growth by transferring people with intellectual disabilities out of institutions and into the community homes where they require costly long-term care.

Markva said the annual cost per Medicaid enrollee was $1,617 in 1980, and that rose to $6,453  in 2010.

"This is a 453 percent increase or about 6 percent per year," Markva said. "Much of this increase is simply the same increase in health care cost that everyone experience over this time period. Some increase was also due to the creation and expansion of waiver programs, which bring into the program new members and new services, resulting in higher per person costs."

The rest of the nation has also seen large hikes in their Medicaid spending.

Total Medicaid spending among all states rose from $33.1 billion in 1985 to $398.4 billion in  2012, according to a report from the National Association of State Budget Officers. That’s an 1,100 percent increase. Adjusted for inflation, it comes to a 332 percent rise.

Our ruling

Howell said the cost of Medicaid in Virginia "has grown by 1,600 percent over the last 30 years." We find no reason to quibble. The Speaker accurately cited budget figures kept by the House Appropriations Committee, a source that many around the Capitol -- including PolitiFact Virginia -- turn to for reliable data.

We rate his statement True.