Medicaid cuts would harm Virginians and the state budget

The budget reconciliation bill expected to be passed by Congress would impose a significant burden on Virginia, including the elimination of Medicaid benefits and safety net assistance for hundreds of thousands of residents.

The bill will result in a 21 percent cut in Medicaid for Virginia, state Sen. Saddam Salim (37th District-Merrifield) said at a July 10 forum organized by the Fairfax County Democratic Committee.

“Rural hospitals will struggle to keep their doors open,” and that will have a ripple effect, causing healthcare costs to rise for everyone, Salim said. In addition, the bill is “literally taking food away from families,” as 100,000 low-income Virginians will lose Supplemental Nutrition Assistance Program (SNAP) benefits. 

“This is about real people – the elderly, children with disabilities, and families who rely on Medicaid for life-saving care,” Salim said.

Shifting priorities

The one thing that motivates Republicans in Congress is cutting taxes for the very wealthy and taking healthcare from working people,” said Braddock Supervisor and congressional candidate James Walkinshaw. “Fundamentally, that’s what this bill does.”

“It is a complete fiscal disaster,” Walkinshaw said. For anyone who believed the Republican Party is the party of fiscal responsibility, this bill should explode that myth the way it explodes the deficit and the debt.”

The bill adds $3 trillion to the national debt and will be a driver of inflation, resulting in higher costs for food and housing, he said. It phases out tax incentives for electric vehicles and solar and wind energy, driving up energy costs and abandoning the progress made on climate change.

The bill significantly boosts funding for ICE, accelerating the deportation of law-abiding, taxpaying immigrants and terrorizing communities, rather than investing in community policing, Walkinshaw said. “More funding for ICE’s terror campaign does not make our communities safer.”

Medicaid cuts

In 2026, Virginia could lose as much as $500 million in Medicaid revenue. By the end of the decade, that will ramp up to some $4 billion, said Andrew Pavord, CEO of the Federal Consulting Alliance.

The Medicaid funding reductions won’t kick in until 2027. That means Republicans campaigning in the 2026 midterms will claim they didn’t cut Medicaid, Pavord said.

The bill eliminates the Accountable Health Communities program, which allows people to use Medicaid to pay for Medicare premiums and co-pays, which is especially important for the elderly, he said.

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In addition to the funding cuts, the bill includes new rules that will make it more difficult to access healthcare. “They’re attacking at multiple levels,” Pavord said. “Taken together, the new rules are really damaging.”

The bill puts a staffing moratorium and payment caps on funds for nursing homes, which will decrease the quality of care, Pavord said.

For low-income adults and children who receive Medicaid, the Republicans reduced retroactive coverage from three to two months. They also established work requirements for parents with children over 13 years old.

The bill also makes several changes to the Affordable Care Act, Pavord said. They’re making it harder to access health insurance by requiring verification of eligibility more often, whittling away at the tax credits for premiums, and making many other changes.

For recipients of Medicaid under the Affordable Care Act expansion, they established a work requirement, reduced retroactive coverage to one month, and require co-pays of up to 5 percent of a person’s salary.

Someone making $20,000 would now have to pay $1,000 in co-pays. “That’s pretty brutal,” Pavord said.

Other provisions affect all Medicaid recipients, including eligibility determinations every six months. “That’s twice the paperwork and twice the chance of somebody being kicked off because of a mistake in paperwork,” he said.

The Republicans also reduce the level of federal payments for emergency care for undocumented immigrants and prohibit payments to any organization that provides family planning or abortions.

In all, he said, these changes will knock 135,000 Virginians out of the program, and 300,000 will lose health insurance over 10 years.

Unfunded mandates

The bill includes many unfunded mandates that will have a big impact on Virginia’s budget, Pavord said.

The state will have to come up with a system to check for duplicate enrollments that meets federal standards, conduct eligibility checks every six months, implement a system to manage co-pays, and create a system to manage work requirements. When Georgia established a system for work requirements, it cost $100,000, he noted.

Meanwhile, Medicaid payments for hospitals will decrease over the decade, he said.

Those cutbacks will have a damaging impact on rural hospitals, Pavord said. A 28 percent reduction in Medicaid revenue means Inova will lose $134 million in revenue. Some hospitals, especially in rural areas, are likely to go bankrupt and close.

“Those illnesses and treatments aren’t going to go away. People will still get sick,” Pavord said. Under the law, if someone goes to the emergency room, the hospital has to provide care.

As a result, hospitals will be forced to shift those costs to other sources of revenue. That means they will have to raise the costs for non-Medicaid recipients, Pavord said. “This doesn’t just hurt the poor, it hurts everybody.”

Tax cuts for the wealthy

The bill includes $5 trillion in tax cuts, with the richest 0.1 percent getting an average tax cut of $300,000, Walkinshaw said.

Under the bill, there are additional loopholes for the rich to avoid taxes. The cuts to the federal workforce by some 50 percent will limit the agency’s ability to audit tax returns, “giving the very wealthy carte blanche to manipulate the tax code,” said Del. Vivian Watts (14th District-Annandale).

Republicans tout the provision in the bill giving seniors a $6,000 Social Security tax deduction, said Watts, yet at least half the seniors have too little income to benefit, and for those who do, the most they’ll get is $720.

That measure, as well as other tax provisions aimed at the middle class, will expire at the end of Trump’s term. Further, Virginia doesn’t tax Social Security, Watts noted.

The elimination of the tax on overtime work will result in an average tax break of $1,800 but will amount to just $10 for most low-income workers, she said.

The child tax credit will increase from $2,000 to $2,200, Watts said, but 87,000 Virginia children will be excluded because of a new provision barring an undocumented parent who doesn’t have a Social Security number.

Another new provision authorizes a tax credit for contributions to nonprofits that fund scholarships for private K-12 schools. That will divert taxpayer money away from public schools.

Virginia’s economy

Unlike the federal government, Virginia is required to have a balanced budget.

Virginia’s annual general fund budget is $30 billion a year, Watts said. We’re going to lose $33 billion in Medicaid over the next 10 years. “We’re also going to have to work extremely hard to make sure people are eligible under the new rules.”

In addition, Watts said, massive cuts in K-12 education, SNAP, and other programs will put pressure on the state budget. At the same time, Virginia will lose tax revenue, making it much more difficult to fund critical ongoing needs.

Before this bill, federal spending made up one-third of Virginia’s budget, Watts said. “All of those funds are in extreme jeopardy.”

The Republicans are “gutting the Department of Education, and they’re systematically gutting science,” Pavord said.  

They’re calling for a slashing the National Institutes of Health budget by 40 percent. Funding for energy science programs would be cut by 14 percent, the National Science Foundation budget by 54 percent, NASA’s science programs by 46 percent, and the National Oceanic and Atmospheric Administration by 40 percent.  

“This has a huge impact,” as these programs fund much of the research at universities, Pavord said.

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The 30 percent cut proposed for Pell Grants will cost George Mason University $14.7 million in student aid, he said. In addition, the Republicans call for a $270 billion reduction in student loans over 10 years.

Major changes to the SNAP program will reduce benefits to lower-income people, he said. States will be required to contribute to the program, which means Virginia will have to come up with $180 million to cover the difference. Virginia will also have to pay $80 million in new administrative costs.

States are going to have to find $37 billion to make up for cuts to FEMA, he added. Meanwhile, global warming is going to increase the cost of disasters.

According to Pavord, the shutting down of USAID, which is illegal, is the worst of all. The termination of global food assistance has so far led to 130,000 deaths, including 89,000 children. Another 14 million people are projected to die in the next five years. “This is brutal, and they’re lying about it,” he said.

Fighting back

“The Republican budget is about people,” Pavord said. “Behind every number is a human being.”

He urged Democratic leaders to learn the stories of people harmed by the funding cuts and tell those stories, “because people need to understand it in human terms.”

According to Walkinshaw, the budget reconciliation bill “gives Democrats the opportunity to communicate to the American people what Trump and his Republican majority in Congress are all about.”

“It is really important to communicate the fact that Republicans are lying about this bill,” Walkinshaw said. “My Republican opponent said it doesn’t cut a dime from Medicaid. That is flat out untrue.”

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