Big bills, tough choices: proposed federal cuts threaten Va.

RICHMOND — Virginia would face big bills and tough choices if the Congress adopts federal spending cuts GOP committees proposed this week that would shift the cost of food assistance to states, make it harder for people to get health care through Medicaid and cost them more to buy health insurance.

A pair of Republican-controlled committees in the House of Representatives released proposed budget cuts that could cost Virginia hundreds of millions of dollars each year and force the state to increase its share of spending or reduce services to people who need help the most.

The proposed cuts would partly offset a separate package of proposed tax cuts totaling $3.7 trillion, with the biggest share going to the wealthiest Americans.

One of the biggest blows would land on the Supplemental Nutrition Assistance Program, or SNAP. The House Agriculture Committee proposed to increase the states' share of costs for running the $1.8 billion state program, which serves almost 900,000 Virginians, by at least $353 million a year.

"It's terrifying, frankly," said Rebecca Morgan, director of social services in Middlesex County and president of the Virginia League of Social Services Executives.

House Speaker Don Scott, D-Portsmouth, who appointed an emergency committee this year to examine the potential fallout from federal job and spending cuts in Virginia, said Wednesday, "What they're proposing should scare the bejesus out of every Virginian."

Virginia policymakers had focused most of their attention on potential cuts to Medicaid that would reduce the federal share of costs. That could have triggered the rollback of an expansion of eligibility in 2019 that has added more than 641,000 residents to a program with a total of nearly two million recipients. Virginia hospitals also have been concerned about proposals to block provider taxes that states use to draw down federal Medicaid dollars that they use to raise provider reimbursement rates.

The House Energy & Commerce Committee pulled back from those proposals because of mounting concern among Republican incumbents in battleground districts. The committee would grandfather existing provider taxes, including the 6% levied in Virginia, while prohibiting their expansion or new ones.

Sean Connaughton, president and CEO of the Virginia Hospital and Healthcare Association, credited Rep. Morgan Griffith, R-9th, for intervening to protect reimbursements that he called "essential for sustaining high-quality and affordable care for Medicaid recipients across the commonwealth," but especially hospitals in rural areas.

Proposed work requirement

However, the committee advanced options for imposing a work requirement and requiring more frequent review of eligibility, with both assuming that millions of Americans will fall out of the program. Maryland estimates those proposals would cost the state $1 billion, according to a report by the Baltimore Banner, but Virginia has not calculated the potential hit to its budget.

The Congressional Budget Office this week estimated that the package of proposed cuts would reduce spending for Medicaid by $715 billion through 2034, while increasing the number of uninsured people in the U.S. by 7.7 billion.

The House Republican plan to let insurance premium tax credits expire after this year would cause 4.2 million Americans to lose their health insurance by 2034, and an additional 1.8 million would lose their coverage under other proposed rule changes, the CBO estimated.

Rep. Jennifer McClellan, D-4th, a member of the Energy & Commerce Committee, said the proposed budget bill "effectively cuts the Affordable Care Act and Medicaid, kicks 13.7 million people off their health insurance" and shifts the burden to states already facing potential revenue shortfalls in their budgets.

At the same time, the House Agriculture Committee advanced a package of spending cuts that would for the first time require states to pay a portion of SNAP benefits to help low-income Americans buy food, while increasing the state share of the cost to administer the program.

"It's really bad," said Cassie Edner, a lawyer at the Virginia Poverty Law Center in Richmond.

Food banks

The proposal would shift as much as 25% of the benefit cost to the state, depending on its error rate in eligible payments. Currently, Virginia's error rate of 9.86% is below the national rate, but the proposal would require the state to pay 20% of the cost of SNAP benefits, or $353 million a year. That amount would rise to $441 million a year if the error rate rises above 10% under proposed new rules for calculating the rate.

The proposed change would take effect in 2028, but Edner said, "No matter when it goes into effect, it's still devastating."

The potential damage would be felt beyond state government, hitting food banks, grocers and farmers working to provide healthy food to underserved communities.

"We are deeply concerned about the size of the cuts that they are proposing," said Eddie Oliver, president of the Federation of Virginia Food Banks, which includes seven regional food banks and about 1,100 food providers.

"It's really important that SNAP as an anti-hunger program stays strong, so we can serve the hundreds of thousands of people who aren't eligible for SNAP," Oliver said Wednesday

Virginia food banks served more than 700,000 people last year and distributed 170 million pounds of food, but Oliver said the network already is stretched thin and faced with a potential increase in unemployment as the threat of recession looms.

"We're really operating at full capacity now," he said.

Fresh Match program

The Market @ 25th, a six-year-old grocery store in Church Hill, gets about 20% of its business each month from people using their SNAP electric benefit transfer, or ebt, cards to pay for food that includes healthy, fresh options. The market participates in the Virginia Fresh Match program that deducts half of the cost of purchases for people using ebt cards to pay.

"In effect, it doubles their money in buying fresh and frozen fruit and vegetables," said Derek Houston, the market's CEO. "The way they do their shopping has changed because that's available, and the way they eat."

The store, which employs 65 people, does about $100,000 in business through ebt purchases under SNAP. "We need all the business we can get," Houston said. "With so many people using ebt cards, anything that reduces that hurts our financial sustainability."

President Donald Trump already has rescinded a $7 million grant for the Local Food Purchasing Assistance program his predecessor, President Joe Biden, created to help connect farmers with underserved markets to provide them fresh, locally produced food.

"It pulls the rug right out from under your plans," said Eugene Triplett, a fourth-generation farmer in Culpeper County who sells produce and beef to 4P Foods, a Warrenton-based "public benefit corporation" that distributes it.

The food assistance program is not part of SNAP, but Rep. Eugene Vindman, D-7th, who represents Triplett, is trying to persuade the House to restore the program and include funding for it.

"Many of the individuals who benefit from this program also rely on SNAP, so eliminating it while simultaneously making deep cuts to SNAP will have serious consequences for low-income families and, ultimately, for the farmers who grow the food these programs help distribute," said Claire Hutto, Vindman's press secretary.

SNAP and Medicaid recipients also would be affected by proposed work requirements that Congressional Republicans expect to reduce enrollment in both programs in order to reduce federal spending and offset tax cuts that Trump has proposed.

The SNAP program already includes a work requirement, but the committee proposals would broaden its scope by raising the maximum age to 64 from 54, while lowering the age for exceptions to the rule for families with children under seven years old, instead of 18. The proposals also would raise the unemployment rate required for a waiver that residents of Petersburg, Hopewell and Emporia currently use.

Medicaid currently does not have a national work requirement. The House committee proposal would require "able bodied adults without dependents" to complete 80 hours of work, education or community service each month. It would provide $100 million to the states in the next fiscal year, beginning Oct. 1, to establish systems to carry out the mandate. More than 92% of Medicaid recipients already work, and others need help to find a job.

Former Virginia Sen. Emmett Hanger, R-Augusta, who helped lead the state's adoption of Medicaid expansion in 2018, has long favored a work requirement, but as a "hand-up" approach that includes support services necessary for people to be able to work.

"It depends on how they structure it," Hanger said this week. "I can support having a work requirement, but not in a punitive way."

'Attrition by bureaucracy'

Advocates say the proposed cuts to Medicaid are aimed at saving money by making it harder for people to stay enrolled in the program. They say the same thing is true for a House committee proposal to require states to review and renew eligibility for benefits twice a year instead of once.

"It's going to be attrition by bureaucracy," said Emily Hardy, an attorney at the Virginia Poverty Law Center and deputy director of the Center for Healthy Communities.

Hanger, who retired from the Senate last year, is waiting for the details of the committee proposals, but said he is wary.

"The way it looks now, it could be a step backward for health care," he said.