Protesters gather outside Richmond’s Hippodrome theater on June 17, 2025 to highlight congressional consideration of cuts to Medicaid. (Photo by Bert Shepherd, courtesy of Protect Our Care political action committee)
Virginia’s hospitals are monitoring congressional budget proposals with concern.
While the recently-passed U.S. House of Representatives’ version of the President Donald Trump-backed “big beautiful bill” retained federal mapping that preserves Medicaid access in Virginia, a new draft in the U.S. Senate could alter two critical funding mechanisms that support Virginia’s hospitals and their ability to bolster the state’s expanded Medicaid program.
The Senate proposal could change provider assessment rates and state-directed payment programs. The two funding mechanisms are critical to hospital operation in Virginia and how they chip into the expansion of Virginia’s Medicaid program.
Ultimately, the Virginia Hospital and Healthcare Association estimates each program could take a $2 billion hit, if the proposal is fully implemented.
“If you are taking policy actions that impact Medicaid, that is going to impact providers’ stability, access to care for patients and could destabilize hospitals or even lead to closures,” said Julian Walker, vice president of communications with the association.
Federal fallout
As federal funding and systems dwindle, states are left to decide how and
whether to make up the difference.
Provider assessment rates are essentially a type of tax that hospitals use to help cover the state’s share of Medicaid costs, allowing them to draw down additional federal matching funds. Changing that rate would also change how much money hospitals can tap into for themselves, and to feed into the state’s Medicaid expansion.
Medicaid is a large federal program that helps states provide health insurance to their low-income or disabled residents. In 2018, when Virginia expanded its Medicaid program to make more people eligible, Virginia’s hospitals footed some of the bill for it. Walker emphasized that the two funding tracks the Senate bill is exploring are interconnected when it comes to supporting hospitals and Medicaid in Virginia.
More than the potential for people to lose their health insurance, Democratic U.S. Senate leadership has stressed how rural hospitals could suffer.
“Enacting these drastic health care cuts that will kick millions of people off their health insurance coverage, rural hospitals will not get paid for the services they are required by law to provide to patients,” wrote Sens. Edward Markey, Ron Wyden, Jeffrey Merkley, and Chuck Schumer in a letter to Trump and House Speaker Mike Johnson, R-La.
“In turn, rural hospitals will face deeper financial strain that could lead to negative health outcomes for the communities they serve,” they added.
The cuts federal lawmakers are exploring are part of a Trump-led effort to extend certain tax cuts and trim the federal deficit, while boosting federal spending on defense and border security. Legislators have explored cutting several federal social aid programs or incentive packages to achieve these goals. Medicaid in particular has appeared to be a potential target, as it’s one of the largest sources of federal spending to states.
While Republicans, which currently control both chambers of congress, have largely been on board with Trump’s plans, some like Sen. Josh Hawley, R-Mo, have expressed caution as lawmakers continue to workshop the proposals.
Walker, with the Virginia Hospital and Healthcare Association, also said hospitals in rural areas could see a domino effect of problems if the Senate version progresses as-is. Rural hospitals are often a key local employer, Walker explained, and they also often serve sizable portions of Medicaid patients.
In the meantime, he said that Virginia’s hospitals are engaging with lawmakers in D.C. about the issue.
The Mercury reached out to U.S. Sen. Tim Kaine’s office for comment but didn’t hear back by press time.
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Author: Charlotte Rene Woods
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