Federal Medicaid cuts threaten Va.

After months of deliberation, Virginia lawmakers finalized budget negotiations shaped by two overlapping challenges: generating revenue to invest in our communities and responding to the damage caused by President Donald Trump's H.R. 1. While temporary revenue from asking the data center industry to contribute more fairly will support important investments, it cannot offset the long-term consequences of H.R. 1. The federal budget bill is already kicking people off their health insurance, increasing costs for Virginia, and putting rural health centers and communities at risk.

Just three years ago, Virginia reached a historic milestone when 93.6% of residents had health coverage. Thanks to Medicaid expansion, COVID-era protections, and enhanced Affordable Care Act premium tax credits, more people had affordable health coverage.

But that progress is increasingly at risk. Since the enhanced ACA premium tax credits expired, 100,000 people in Virginia have been priced out of marketplace coverage. Virginia hospitals also reported an 8% increase last year in emergency department visits from people without or unable to present insurance information. H.R. 1 could push an additional 260,000 people off their health insurance — over 70% of whom are covered through Medicaid and have some of the lowest incomes in Virginia.

The consequences extend beyond the people who lose coverage. H.R. 1's Medicaid cuts will reduce funding that rural hospitals depend on to stay open, jeopardizing care for entire communities. Virginia was among the first states to see rural health centers close preemptively, with providers pointing to H.R. 1 as a cause. A recent presentation to the Joint Commission on Health Care noted that 13 rural hospitals in Virginia — over one-third of hospitals serving rural communities — are at risk of closure. Losing even a handful of these hospitals would mean longer drives for care, fewer local jobs, and greater strain on neighboring health systems.

Congressional Republicans are driving these harmful outcomes by imposing new requirements that will push people off Medicaid coverage. Adults who gained coverage through Virginia's Medicaid expansion will now have to regularly report work activities, even though previous experience from other states shows that eligible people often get kicked off coverage because of paperwork problems and administrative barriers, including people with disabilities who should be exempt. H.R. 1 also doubles the number of times people must complete eligibility screenings, from once to twice a year, increasing the likelihood that people will lose coverage simply because they miss a deadline or face other hurdles.

These new federal requirements come at a cost for all of us. Lawmakers included $134 million in the state budget to administer these new federal rules. H.R. 1 also increases costs for many people who manage to keep their coverage by requiring new co-pays for those who qualify due to Medicaid expansion. More than 147,000 people in Virginia will be affected. For a family of three with a household income just above the federal poverty line — around $26,000 a year — this could add $1,345 in annual healthcare costs. These are the same families already struggling to keep up with the rising costs of groceries, gas, housing and other essentials.

Health policy experts report that 97% of the Medicaid funding cuts come from policies intended to kick people with low incomes off Medicaid rather than improve program integrity. In response, Virginia budget conferees included $3.5 million for outreach, workforce training and implementation support to help people navigate the new requirements. They invested $15 million in Virginia's free clinics and Federally Qualified Health Centers, which will face growing demand as more people become uninsured. They also established a $225 million Federal Uncertainty Contingency Fund, anticipating future federal funding cuts.

Instead of further strengthening healthcare, teacher pay, housing affordability and other priorities, state lawmakers had to divert resources to address H.R. 1's harms. That's because Congressional Republicans chose costly tax handouts for billionaires and massive corporations over protecting healthcare for the people they represent.

Virginia lawmakers took meaningful steps in the budget to mitigate some of the immediate harm caused by H.R. 1. Still, state action can only go so far when Congress shifts costs onto states and makes healthcare even harder to afford.

Legislative leaders, healthcare providers, patient advocates and organizations such as The Commonwealth Institute and Protect Our Care warned that these cuts would push people off of health coverage, strain rural providers and increase costs for states. We remain united in calling on Congress to reverse course so that healthcare is more affordable and accessible, and lawmakers can focus on strengthening communities rather than responding to preventable harm.

Ashley Kenneth is the president and CEO of The Commonwealth Institute for Fiscal Analysis. She can be reached at ashley@thecommonwealthinstitute.org.