Summed Up: The $96 Billion State Budget Showdown 

The clock ticks away on passing a crucial $96 billion, two-year budget caught in a stubborn General Assembly stalemate. Without a deal by July 1, a political and economic catastrophe could erupt. State workers might not be paid and the state could lose its pristine credit rating.

The situation grew more uncertain this week when state Sen. Phillip Puckett, a Democrat from Russell County, abruptly retired Monday. The sudden move, immediately condemned by Democrats as a GOP power play, gives Republicans a 20-19 majority in the Senate. It also opens the possibility for Puckett to land an influential job with the state tobacco commission and for his daughter to win legislative appointment as a full-term judge.

Here are five things to know:

1. The budget holdup is about whether to tap into $2 billion in federal money offered under President Barack Obama's Affordable Care Act, known as Obamacare, to expand Medicaid health care coverage to 400,000 low-income Virginians who don't qualify for regular Medicaid. Democrats favor expansion. Many Republicans see the Medicaid program as too expensive and wasteful.

2. The Medicaid expansion has, in fact, already been approved, if in name only. The General Assembly approved expanding Medicaid last year with the goal to set up insurance exchanges run by private insurance companies by January. But lawmakers added one big caveat: Not a single, eligible Virginian could access expanded Medicaid benefits until the newly created gatekeeper, the Medicaid Innovation and Reform Commission, signed off on the plan. The commission, a 12-member legislative panel, is part fraud watchdog, part tailor of Virginia's plan. It has the final say on what expansion will look like and whether it can go forward at all.

3. The commission's work has been stymied for a couple of reasons. Some Republicans believe there are too many gray areas in the new commission's expansion reforms. Proposals include data systems to track Medicaid dollars, providing ample staff, building in copays and discouraging emergency room abuse, says the commission chairman, State Sen. Emmett Hanger, an Augusta Republican. Obama's botched rollout of the federal health care exchange last fall led to more resistance by Republican delegates on the reform commission, Hanger says, and without their votes the plan cannot go forward: "They were not going to honor their commitments."

4. Joining Senate Democrats, Hanger tried an end run around the recalcitrant Republicans by putting the establishment of private health insurance exchanges in the budget bill. This "private option" would allow Virginia to use federal Medicaid dollars to help low-income people buy private insurance plans. House Speaker Bill Howell and other angry delegates fought back hard, taking the budget itself hostage. Rookie Gov. Terry McAuliffe, a Democrat, naively thought he could use his Irish charm to find compromise. Nothing doing.

5. Puckett's move may doom Medicaid expansion by giving Republicans control of the Senate. (The GOP already controls the House of Delegates.) Outside the immediate politics, a Medicaid expansion via private insurance exchanges remains most viable. Hanger now wants to break the stalemate by removing establishment of the exchanges from this year's budget. At the same time, the commission would continue crafting Virginia's plan with next January as the implementation date, he says. McAuliffe is quietly readying a nuclear option — using his executive authority. That might stick it to Howell, but also would touch off a messy constitutional crisis on top of everything else.


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