Proposed spending cuts loom over state

CONGRESS| TAX BREAKS BILL

RICHMOND — Virginia would face big bills and tough choices if 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 off set 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 of 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