Urgent News for Hospital and Health Systems

Hampton Roads has been blessed with a strong economy in recent years. Shipbuilding, cargo transfer and other industries have fueled strong economic growth that has helped many in our communities. However, the effects of hard economic times are affecting the entire Commonwealth and Hampton roads especially. Cargo imports are down and the potential loss of an aircraft carrier threaten the region. More and more Virginians in the area are losing their jobs and turning to state services such as unemployment and Medicaid in order to survive. But the State is feeling the effects of the economy as well and can’t sustain its current levels of service. The Governor has proposed a budget that cuts back on all core services, but hits Medicaid funding especially hard. The Governor's budget would reduce Medicaid reimbursements from the current 75 percent of cost to 70 percent of cost for inpatient services.
And it gets worse. The Governor also offset further cuts by proposing a 30-cent tax increase on tobacco. Smoking costs Virginia's Medicaid program more than $400 million per year. The new proposal would offset that cost by raising an additional $155 million. Because Medicaid is a federal mandate, the federal government would match the state money dollar for dollar. Without the state money from the tobacco tax and the federal match, Medicaid stands to lose more than $300 million on top of what the Governor has already proposed cutting. That would drop Medicaid inpatient reimbursements down to 50 percent of cost. At 50 percent of cost, health providers in Hampton Roads would be forced to cut services and eventually lay off workers. It is estimated that more than 1,300 workers in health care and other industries across Eastern Virginia would be laid off if the tobacco tax, or its equivalent revenue, is not used to fund Medicaid. These workers are essential to providing all health care services in the area, and all Virginians would feel the effects. Please act now to tell your Hampton Roads-area legislators that Medicaid must be funded in order to preserve access to health care in Virginia.