Gov. Terry McAuliffe is proposing a two-year pilot of an expanded Medicaid program, a suggestion he hopes will persuade Republicans to end an impasse over the state's budget.
McAuliffe announced Monday that the federal government said it would not penalize Virginia if it ran a two-year pilot program. McAuliffe said the approval allows the state to try expanding Medicaid eligibility to 400,000 residents with no risk.
House Republicans oppose Medicaid expansion. The federal government has promised to fund the bulk of the expansion.
The fight over Medicaid has led to a budget stalemate and a special session of the General Assembly that is set to start later Monday.
McAuliffe's proposed budget also includes a 2 percent raise for Virginia public school teachers and for state employees, as well as state-owned college and university faculty.
And it proposes $8.9 million in additional spending for mental health programs in the Commonwealth.
Mental health spending in the state has become a critical legislative issue after state Sen. Creigh Deeds was stabbed by his son, who had just been released from a short-term psychiatric hold because a nearby placement in a mental health program could not be found. Gus Deeds committed suicide.
Medicaid expansion has stalled action in Virginia's Republican-controlled House and Democratically controlled Senate. The two houses could not agree on the state's $96 billion budget during its regular session.