Gov. Bob McDonnell wants the Obama administration to know that Virginia has not approved expansion of Medicaid under the federal health reform law, and that he won’t authorize it “given the vast reform required to make our program cost effective.”

McDonnell reiterated his position on the issue  in a letter to U.S .Secretary of Health and Human Services Kathleen Sebelius today, 10 days after the General Assembly approved a compromise budget provision spelling out conditions that must be met before the state can expand eligibility for the state-federal Medicaid program.

In his letter, McDonnell said the provision details a “series of reforms that must be completed to the satisfaction of a new legislative commission prior to consideration of Medicaid expansion.”

“Some media outlets and elected officials have labeled this as approving Medicaid expansion in Virginia,” McDonnell wrote. “This is absolutely incorrect.”

The Patient Protection and Affordable Care Act extends Medicaid eligibility to individuals with incomes up to 133 percent of the federal poverty level. But, under the U.S. Supreme Court’s 2012 ruling that upheld the law, states can opt out of the expansion. The federal government will pay for 100 percent of the expansion’s cost for three years and then gradually reduce its share to 90 percent.

An estimated 400,000 additional low-income, uninsured Virginians could gain eligibility for Medicaid under expansion, though state officials project that about 250,000 would actually enroll.

McDonnell has said he won’t expand Medicaid eligibility unless the federal government first allows the state to implement reforms that improve service delivery and reduce costs.

“We have just one chance to actually fix the program so that it serves people well, but doesn’t contribute more to the national debt, or produce unsustainable future increases in state general fund expenditures,” he wrote in his letter. “Thus, please do not include Virginia on any list of states that have acted to expand Medicaid, as that would be inaccurate.”

The proposed state budget provision calls for the creation of a 12-member legislative commission, with five members from each house of the General Assembly and two non-voting cabinet secretaries. At least three House and three Senate members on the commission must vote to approve any expansion, which would not occur before July 1, 2014 – nearly six months after McDonnell leaves office.

Some supporters of Medicaid expansion celebrated the budget provision as a victory, given that the Republican-dominated House initially opposed any move toward expansion. And some Republican opponents of Medicaid expansion vehemently opposed the creation of a legislative panel.

But, in his letter, McDonnell said the budget provision“actually places a firewall against expansion consideration, unless real, sustainable cost saving reforms are implemented at the state and federal level.

“Members of the commission have already been appointed by the House of Delegates, and several have already expressed deep concern about expansion,” McDonnell wrote. “Additionally, my office is currently reviewing the budget language to see what changes may be necessary.”

McDonnell can make line-item amendments to the budget bill. Lawmakers will act on his proposed changes in the General Assembly’s April 3 veto session.

“As Governor, while the decision currently rests with me on whether or not to expand, I am not going to do so given the vast reform required to make our program cost effective,” McDonnell continued. “We are just beginning the process of designing and implementing the real, long term, cost saving Medicaid system reforms necessary to ensure the citizens that our Medicaid program is well managed, entrepreneurial, and efficient. My view of necessary reform for our state and nation may be more comprehensive than what is currently contained in the budget.”

– Michael Sluss