House Republicans’ Medicaid cuts threaten Virginia’s rural hospitals

The budget package passed by Republicans in the House of Representatives on May 22 would cut about $700 billion from the Medicaid health insurance program over a decade and could force nearly $500 billion in Medicare cuts. Experts say that if the bill becomes law as written, it would leave more than 260,000 Virginians without insurance coverage and could imperil several of Virginia’s rural hospitals, which are already at risk of closing.

According to the nonpartisan Congressional Budget Office, the Medicaid cuts in the package would reduce the number of Americans covered by the program by about 10.3 million by 2034, 7.6 million of whom would be left without any insurance coverage at all. 

The legislation awaits action in the Republican-led Senate. 

The minority staff of the U.S. Congress Joint Economic Committee estimated that the Medicaid cuts and other health care-related provisions in the bill would leave about 13 million Americans uninsured over that period, including 262,440 in Virginia.

Since President Ronald Reagan signed the Emergency Medical Treatment and Labor Act into law in 1986, hospital emergency departments have been required to provide stabilizing care to anyone who shows up, regardless of whether those patients have health insurance or can afford to pay for the care. Hospitals in Virginia spend hundreds of millions of dollars annually to provide emergency care to uninsured patients.  

While Medicare and Medicaid do not fully cover hospitals’ costs of care, any increase in the number of patients without coverage would mean those hospitals would be on the hook for even more costs. And with many rural hospitals already struggling to stay afloat, the cuts could force some to go out of business.

The Center for Healthcare Quality and Payment Reform, a national policy center that works to improve health care payment and delivery systems, tracks the number of rural hospitals across the country that are operating at an overall financial loss and are at risk of closing. According to its April 2025 report, nine of Virginia’s 31 rural inpatient hospitals are currently at risk of closing. Eight of those nine are at immediate risk of closure.

The Virginia Hospital & Healthcare Association, a trade organization that represents 113 hospitals across the commonwealth, said in its 2024 Virginia Rural Hospital Report: “Rural hospitals generally serve populations that are older, have elevated rates of chronic illness and poverty, and greater reliance on government programs such as Medicaid and Medicare that don’t cover the full cost of care. Rural hospitals also face challenges in recruiting and retaining health care professionals. This combination of factors poses serious challenges for rural health care providers. To illustrate this, consider that more than one-third (36 percent) of Virginia’s rural hospitals had negative operating margins in 2022.”

“There are already hospitals that are facing financial challenges,” Julian Walker, the group’s vice president of communications, told the Virginia Independent in an interview. “A reduction in Medicaid funding that filters down to the hospitals already experiencing financial challenges have the potential to compound those challenges.” 

Kathryn Haines is a former midwife and manages the health equity program for the Virginia Interfaith Center for Public Policy, an advocacy organization representing clergy, houses of worship, and tens of thousands of individuals across Virginia. In a phone interview, she noted that 530,000 Virginians had no health insurance in 2023, according to the Virginia Health Care Foundation, and pointed to a recent CBS Evening News interview in which Valley Health President and CEO Mark Nantz warned that Medicaid cuts could force closures of some of the company’s hospitals.

“It’s a very real threat, because the system is so strained,” Haines said. “This is a very broken system that already we need to be thinking about how to get more people on health insurance so that they have access to health care. So rural hospitals will close because they are already in the red.”

Del. Rodney Willett, a Democrat who chaired the Virginia House of Delegates Select Committee on Advancing Rural and Small Town Health Care in 2024, told the Virginia Independent that the committee traveled around the commonwealth and visited a dozen rural hospitals. “All of them have a high, high reliance on Medicaid and Medicare patients. It’s just, as they would tell us, the math just doesn’t work for them without that patient population, without that funding. They get some level of private payers or privately insured patients. They also have a lot of no-pay patients. Their margins, a lot of them are actually losing money. But the point is that the Medicaid, Medicare, those patients are paid for, and are getting critical health care. So any change in that formula would be absolutely devastating.”

For Virginians in rural communities, losing their local hospital could mean having to travel to access care, Willett said: “It’s just overwhelming to think of the impact if we lost, and we have lost rural hospitals, that’s not to say we haven’t lost them already because of other reasons. The economics on a good day are not great, but to inflict this sort of wound would really be catastrophic.” 

The impact, Willlett added, would also be felt in urban areas, with people from rural areas who can travel coming to facilities there: “You are going to put more pressure on those hospitals because more people are not going to have a choice, then they’re going to have to go to that facility that’s literally many hours away.”

Steve Heatherly, CEO of Sovah Health, which operates hospitals in Danville and Martinsville, told Virginia Public Radio on May 8 that he is concerned Medicaid cuts will slow his company’s growth and undermine patient care. “It impacts the way we can think about the future,” he told the outlet. “It would put individuals living in this community in a really difficult spot, where they may not receive the care that they should.”

Haines said that the House bill includes requirements that people prove Medicaid eligibility every six months, bureaucratic red tape that will cause many people who do qualify for coverage to lose access to the program: “You take your one paid sick day off, if you have paid sick, or your one personal day, if you have a personal day at work — not everybody gets time off. And you go down to your local DSS [Virginia Department of Social Services] office to try and apply for Medicaid, because you know you need to, but the person’s not in there that day, or the line is so long they say come back tomorrow. This is the on-the-ground reality of how the system is functioning currently. And it is not the time to cut funding from the system. It is time to fix the system.”