At the Bradley Free Clinic, patients fill exam rooms for medical, dental and behavioral health care. For 50 years, this safety-net clinic has served some of the Roanoke region’s most acutely ill and vulnerable residents. Now, as the federal government moves forward with Medicaid cuts, clinic leaders like Janine Underwood are bracing for fallout.
“We’re really struggling to figure out what sustainability looks like for not only free clinics, but safety nets throughout the community,” Underwood said. “Whether it’s Medicaid reimbursement or our uninsured population, how are we going to be able to pay for their care?”
The clinic is a nonprofit organization that offers services at no cost to low-income patients, including those on Medicaid, as well as uninsured and underinsured residents.
Underwood is already seeing the financial strain of treating more uninsured patients. Over the past two years, the clinic has seen a rise in uninsured patients due to the Medicaid unwinding, a process that reevaluated Medicaid eligibility after the expiration of a pandemic-era policy guaranteeing continuous coverage.
In 2023, 48% of the clinic’s patients were covered by Medicaid; the remaining 52% were uninsured. Over the last calendar year, the share of Medicaid patients has dropped to 37%.
Underwood relies on government grants and community donations to cover the care provided to those without insurance. Now, she says, even that funding is in jeopardy. Federal grants the clinic once depended on aren’t accepting new applications as everyone braces for a significant drop in federal funding.
The U.S. House of Representatives Energy and Commerce Committee moved forward Wednesday with a budget bill that could cut funding for Medicaid by hundreds of billions of dollars over the next ten years.
Underwood has already begun scaling back. She’s cutting spending on providers, medical supplies and other operational costs. Open staff positions have gone unfilled for two months. Services are being reduced and she’s preparing for the waitlists to grow as Medicaid funding rolls back.
The clinic is preparing for more uninsured patients along with reduced Medicaid reimbursements. Underwood fears a significant loss of revenue and harder choices ahead.
She’s even considering charging modest fees for services or prescriptions, though she knows those costs could be out of reach for many of the clinic’s patients.
Free clinic patients often struggle to keep housing or find their next meal. Many deal with significant trauma, and preventative health care isn’t top of mind when struggling to survive, Underwood said. The majority of the Medicaid patients are working, she said, but they simply don’t make enough money to pay for health care.
1. About half a million Virginians will be affected, in a variety of ways
The U.S. House Energy and Commerce Committee, which oversees funding for Medicaid, voted along party lines Wednesday to move forward with a spending bill that would enact work requirements for people seeking Medicaid coverage. The bill also excluded an extension for enhanced tax credits under the Affordable Care Act — which expire at the end of the fiscal year. The bill would also require Medicaid recipients under the expansion program to begin to pay copays for care, among other measures.
An email from the nonpartisan Congressional Budget Office, circulated among committee Democrats, said that the legislation would lead to a potential total budgetary cut of $912 billion to Medicaid over the next 10 years. That exceeds the initial goal of $880 billion in cuts to the program over ten years, which was called for in the budget framework passed by Congress earlier this year. In total, the number of Americans without health insurance could increase by 13.7 million by 2034, according to the CBO’s estimate.
The office of Rep. Jennifer McClellan, D-Richmond, provided a copy of the CBO’s email to Cardinal News. McClellan sits on the Energy and Commerce Committee.
Statewide, about 480,000 people could be affected by the new work requirements, 147,000 could be affected by new copays for certain services, and 206,000 could lose coverage by the time the spending bill is fully implemented in 2029, according to The Commonwealth Institute’s spokesperson Rodrigo Soto. The Commonwealth Institute is a Richmond-based public policy advocacy group that focuses on advancing racial and economic justice in Virginia. Soto said TCI based its estimates on data provided by the Congressional Budget Office.
All of the 480,000 people estimated to be “affected” in Virginia by changes laid out in the spending bill may not lose coverage, but they may have to work through additional reporting requirements to maintain coverage under Medicaid, Soto said.
“A huge amount of this is making small changes to rules, that makes it harder to navigate getting into the program,” said Richard Frank, director of the Center on Health Policy at the Washington, D.C.-based Brookings Institution.
The Commonwealth Institute estimated that nearly 10,600 people in Southwest Virginia could be affected by the new copay proposals and up to 33,500 in Southwest Virginia could be affected by the work requirements. Nearly 13,000 people are estimated to lose coverage in Southwest Virginia by fiscal year 2029.
2. Griffith: New work requirements comprise the ‘largest of the changes’
Work requirements — called “community engagement requirements” in the bill — include roughly 20 hours of work per week for able-bodied people on Medicaid expansion, Rep. Morgan Griffith, R-Salem, who sits on the Energy and Commerce Committee, said via email.
“The exemptions are broad, including allowing for community service. While there are other tweaks to the Medicaid rules, the work requirement is the largest of the changes,” he said.
Hours spent volunteering and going to school could also qualify as hours “worked” under the new requirement.
“The bill protects the core Medicaid populations, which covers pregnant women, disabled individuals, seniors and children,” Griffith added.
His office declined to provide details when asked about the other “tweaks” to the Medicaid rules on Tuesday, citing the bill’s ongoing markup.
New reporting mechanisms would need to be set up in each state to track hours worked by Medicaid expansion recipients.
These new requirements could primarily affect Virginians who gained coverage through Medicaid expansion, which the state adopted in 2018. This group, adults ages 18 to 64, generates the highest federal match rate for Medicaid funding, said Emily Hardy, deputy director for the Center for Healthy Communities at the Virginia Poverty Law Center.
Hardy expects that many of these individuals will struggle to maintain their coverage under the proposed work requirements, which could lead to a reduction in overall state Medicaid funding.
“We’ve seen this in other states that have implemented [work requirements]. It’s such a bureaucratic, red tape nightmare to get through that,” Hardy said. “Even when you do everything right, you’re still likely to lose your coverage.”
In Arkansas, which rolled out work requirements in 2018, surveys found that most individuals who lost coverage hadn’t failed to meet the requirements — they had difficulty reporting their work hours to the state. A study published in Health Affairs showed that 95% of those who lost coverage were either working or qualified for an exemption, but were disenrolled anyway.
“Instead of outright slashing the Federal Medical Assistance Percentage, Republicans are hiding behind measures that will make it harder for Virginians, especially those in the Medicaid expansion population, to stay enrolled, and harder for states to finance their share of Medicaid,” McClellan said.
Hardy noted that Virginia’s systems aren’t currently equipped to handle the added complexity of verifying work hours or exemptions. The online infrastructure needed to track this information hasn’t been fully developed, and existing system issues remain unresolved.
“It’s like having to go to the DMV to renew your license twice a year,” Hardy said.
More than 450,000 Virginians could be subject to the new requirements, she said. And the requirements are expected to hit hardest among individuals who already face barriers to employment or consistent reporting — such as lacking a high school diploma, access to the internet or transportation, or caring for children, elderly relatives, or people with disabilities.
Hardy also pointed out that people ages 55 to 64 are more likely to suffer serious health events. In states that did not expand Medicaid, adults in this age group were more likely to die than those in states that did.
If the number of Medicaid expansion enrollees drops, so will the influx of federal dollars that help support Virginia’s broader Medicaid program. That could strain the state’s ability to fund other critical services.
3. Medicaid expansion federal cost share remains untouched
The current bill does not change the federal cost share for Medicaid expansion, which comes as a relief to some health care providers.
“We appreciate that in the initial legislative draft, the House Energy and Commerce Committee has maintained the current Federal Medical Assistance Percentage (FMAP) model rather than shifting to per capita caps or block grants,” said Sean Connaughton, president and CEO of the Virginia Hospital and Healthcare Association, said in an email Tuesday.
The bill is not expected to activate trigger language in Virginia’s 2018 expansion legislation, which says the program will need to be unwound and reconsidered should the federal cost share drop below 90%. The remaining 10% state portion of the cost for Medicaid expansion is paid through a tax on hospitals, and health care providers were concerned that the percentage would have increased if the program was rescinded.
Hardy raised concerns about the complexity and lack of transparency around federal Medicaid cost-sharing rules in the new bill. While there’s no specific proposal to change the federal cost share, some potential provisions could indirectly affect it. For example, one proposed change would lower the federal match for states that fund services for people who are in the U.S. illegally, even though those programs are required or permitted under federal law. One such program is emergency Medicaid, which covers medical emergencies.
Other cuts could indirectly affect the amount of money the state receives from the federal government.
“There’s a variety of things in [the spending bill] that clip away at various ways that states have figured out how to use Medicaid provisions to increase the federal participation in their program. One of them is provider taxes, and some managed care taxes and things like that that are all being taken out,” Frank said.
Provider taxes help the state pay for its share of the Medicaid program, and has served as a primary funding mechanism since the program started. The bill bars states from implementing new provider taxes.
Virginia is among the states that make the least use of provider taxes nationwide, according to Hardy. In the past, there has been significant capacity to explore provider taxes as a potential funding source for expanding programs, adding new services or easing the burden on individual tax payers.
Now, states will have to find alternative funding sources for new programs.
Hospitals, particularly those in rural areas, rely heavily on revenue from patients covered under Medicaid expansion.
It is unclear how the new work requirements and other changes could affect that revenue but, Frank added, increasing the number of uninsured people could make a big difference to some rural hospitals.
“Rural America is economically more fragile than the rest of the country,” Frank said.
4. In the Senate, more changes are likely
The bill was passed out of the U.S. House Energy and Commerce Committee on Wednesday in a 30-24 vote after a marathon 26.5 hour-long markup. It will need to be cobbled together with other appropriations legislation making its way through other House committees before the full spending bill is ready to be voted on by the House. That could happen as early as next week.
If the full spending bill passes the House, it will then advance to the narrowly divided U.S. Senate, where its fate is uncertain.
Some Republican senators have voiced concerns with the legislation, and noted that the bill may have to be revised once it gets to their chamber in order for it to pass, according to reporting by The Hill.
Virginia’s two Democratic U.S. senators, Mark Warner and Tim Kaine, issued their opposition to the bill on Tuesday.
Warner called the legislation “disastrous” for rural areas, where hospitals and health care providers remain open because of Medicaid health coverage.
“These cuts will wreak havoc for all of Virginia taxpayers, who will have to spend more to make up for the federal government not paying its fair share,” he said, and urged members in the House to fight the legislation.
Kaine said he is “deeply concerned” about the potential impacts of the cuts outlined in the spending bill on Virginia.
“I will continue to oppose these cuts to ensure Virginians can continue to have the health care they need,” he said.
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Clarification 10:50 a.m. May 16: An earlier version of the article was unclear on whether emergency Medicaid is facing a specific reduction. There is no direct proposal to reduce emergency Medicaid. However, the budget language does not clearly exempt programs required under federal law, such as emergency Medicaid, from triggering a broader reduction in the Medicaid expansion federal match rate. The story has been updated.
