Do Kids Come Second in Budget Battle?

JOHN MCINERNEY TIMES-DISPATCH COLUMNIST
Published: March 10, 2010

It's tough being a kid in Virginia today, especially if mom or dad can't get health insurance on their own. Gov. Bob McDonnell and the House of Delegates have issued budget proposals that would make sure fewer children and pregnant women have access to health coverage than do now. They would deny 30,000 kids and expectant mothers access to the state's health insurance program and make that program among the most restrictive in the nation.

Virginia's children's health insurance program is called Family Access to Medical Insurance Security (FAMIS). It provides health insurance with affordable cost-sharing for 155,000 kids and thousands of pregnant women throughout the commonwealth. FAMIS is available to families who don't have coverage through an employer and can't afford it on their own. Income limits apply; a family of three has to make less than $36,600 a year to qualify.

FAMIS and programs like it have a proven record. Children with health insurance receive regular primary care for basic medical needs and as a result perform better in school, are healthier, on average, than those without insurance, and have a chance to be more productive workers and citizens. Including pregnant women in the program has obvious benefits too, allowing them the prenatal care that can help reduce infant mortality and improve the health and development of the child. In short, FAMIS is more than health coverage; it provides peace of mind to thousands of Virginia's families and is a great investment in the state's future.

And, it's needed now more than ever. The prolonged national recession means more and more Virginians have lost their jobs and the health insurance that went with them. Yet, at a time when the case could be made for opening FAMIS to more kids, the state is on the verge of kicking out thousands.

McDonnell says he would close FAMIS to anyone not currently enrolled. The House of Delegates says reduce income eligibility to a point where a family of three making more than about $31,500 would no longer qualify.

Defending their proposals, lawmakers have left the impression that Virginia is overly generous with health care spending and that the cost of providing care to kids is not merited. In reality, Virginia ranks near bottom in how much we spend on these programs and who is eligible for them. Though the state is one of the 10 wealthiest in per capita income -- which would seem to suggest room to be generous -- only two states spend less per-capita on Medicaid. And 42 states cover children whose families have incomes at higher levels than Virginia's FAMIS. That includes all of our neighboring states. In 2009 alone, 23 states expanded eligibility or simplified enrollment policies. Virginia was not among them.

This is not to deny Virginia has money problems. Like other states it has seen record drop-offs in revenues because of the recession. Certainly, Virginia's $4 billion budget shortfall over the next two years will require tough choices. But 18 states, including several in the South, have dealt with or currently face even larger projected shortfalls in the coming year. Yet only Arizona (which faces a deficit twice as high as ours) and Virginia have chosen to make forcing kids out of their health care programs part of the plan for balancing the state budget.

There are other ways to close the gap between people's growing needs and the state's shrinking resources. But the House of Delegates and McDonnell have rejected a balanced approach that would include new revenue instead of relying only on cuts in spending. And they refuse to curtail generous corporate welfare programs they claim provide incentives to business, without evidence of their effectiveness or attempts to measure results. All they have is wishful thinking in contrast to the rock-solid evidence that investing in kids' health pays off big-time.

Lawmakers say the cuts to FAMIS would save the state more than $37 million over the next two years. Actually it would cost the state much more than that. They ignore that every dollar Virginia spends on FAMIS brings the state almost two dollars in federal funds. So the proposed cuts would mean Virginia forgoes about $70 million in federal funding. That adds up to a reduction of over $100 million in health care services for Virginia's kids and pregnant moms.

And if the health impacts of that are not compelling enough, consider the economic implications. That money doesn't just go into the atmosphere somewhere. It pays doctors, hospitals, and other providers of health care to children. So a $100 million cut means that much less economic activity in the state, further threatening our fragile recovery.

A state's budget reflects its priorities as a society. Closing off FAMIS to thousands who need it would be an unmistakable statement that Virginia's priorities are seriously misplaced.

John McInerney is health policy director for The Commonwealth Institute for Fiscal Analysis.
Contact him at john@thecommonwealthinstitute.org