Virginia Braces for $26B Medicaid Cuts
Virginia's health systems are facing an estimated $26 billion in Medicaid cuts over the next decade due to new federal law. The reductions are expected to hit safety-net hospitals and clinics hard, threatening the stability of maternal and newborn care services for high-risk populations across the state.
The sweeping $911 billion in federal Medicaid cuts stem from the One Big Beautiful Bill Act, signed into law on July 4, 2025. Virginia's Department of Medical Assistance Services projects this will strip $26 billion in federal payments from the state's healthcare facilities over the next 14 years. These cuts are expected to cause an estimated 260,000 to 300,000 Virginians to lose their Medicaid coverage due to stricter eligibility rules and funding reductions. The legislative changes also include work requirements and more frequent eligibility checks, creating additional hurdles for beneficiaries to maintain their coverage. For maternal health, the stakes are particularly high as Medicaid covers the births of one in three babies in Virginia. Optional benefits that have been proven to improve birth outcomes, such as certain midwifery services and doula support, are now at risk of being cut by the state to manage the budget shortfall. This comes at a time when 31% of Virginia's counties are already classified as maternity care deserts, lacking adequate access to obstetric providers. Rural healthcare access is under significant threat, with warnings that six rural Virginia hospitals are at risk of closing due to the funding cuts. The legislation also reduces the provider tax, a key funding mechanism that helps hospitals, particularly those in rural areas, cover the cost of care for Medicaid patients. This could have devastating effects on the sustainability of hospitals and the availability of care in communities across the state.
