Lt. Gov. Winsome Earle-Sears has suggested the state use its “rainy day” fund to cover the cost of Medicaid in Virginia should the federal, so-called “One Big Beautiful Bill” increase the cost share paid by Virginia for the program.
“We want to make sure that whatever happens with Medicaid, we have the money here to help. We have the money and the budget to help. You know, we have put money aside for rainy day,” Sears said at an event in Marion, according to audio obtained by Cardinal News. “The bank account has never been that full. And so we are ready for any changes that happen.”
Earle-Sears, the Republican nominee for governor, made the comment during a meet-and-greet in June in response to a question from an event attendee about access to hospitals in the area.
Earle-Sears’ campaign did not respond Monday when asked if the lieutenant governor maintained the position that using the state’s rainy day fund to cover Medicaid funding shortfalls was the campaign’s current policy platform, or if her stance had changed since the passage of the bill by Congress on July 3. The bill was signed by President Donald Trump on July 4.
What do appropriations lawmakers think about that?
Virginia’s rainy day fund had about $4.7 billion in it, as of Monday. The fund, meant to safeguard against an economic downturn, was created in 1992 through a constitutional amendment, following a recession.
Virginia could see a $29 billion decrease in federal Medicaid spending over the next 10 years, according to analysis by KFF, an independent health policy research organization based in San Francisco.
The rainy day fund, or the revenue stabilization fund, is meant to work as Virginia’s savings account — to be used to offset anticipated shortfalls in revenue. Virginia withdrew money from the rainy day fund following the Great Recession to soften the blow of the economic downturn during the 2008-2010 fiscal period.
Lawmakers have argued that tapping into the state’s reserve is not a good long-term solution to cover possible Medicaid funding shortfalls created by the federal reconciliation bill.
Sen. Creigh Deeds, D-Charlottesville, said he doesn’t oppose using the rainy day funds to cover the cost in the short term.
“But I don’t think it’s a good idea to consider its use long term to make up for the loss of federal Medicaid dollars,” he said. Deeds sits on the state Senate Finance Committee. “Use of the rainy day fund for a long term problem is contrary to the purpose of the rainy day fund.”
Del. Terry Austin, R-Botetourt County, who sits on the House Appropriations Committee, said it is difficult to make an assessment without solid data from state agencies.
“However, the idea of using Virginia’s rainy-day fund to cover potential Medicaid shortfalls, while technically possible, is probably not the best path forward,” he added.
Del. William Morefield, R-Tazewell County, who also sits on the House Appropriations Committee, pointed out that certain criteria would need to be met in order for the General Assembly to be able to appropriate funds already in the rainy day reserve.
Virginia law requires that the general fund forecast present a deficit, compared to the total general funds appropriated — in other words, the state would not have enough money to cover the cost of what it planned to spend for the fiscal year. That deficit would need to be 2% or less of tax revenue collected in the most recent fiscal year. Even then, Virginia law allows only half of the amount in the rainy day fund to be withdrawn at a time.
The House and Senate money committees are expected to receive an annual update on the fiscal status of the state from Gov. Glenn Youngkin and Secretary of Finance Stephen Cummings on Thursday.
“I do believe we need to explore all options if the federal cuts do result in a significant impact,” Morefield said. “Medicaid is vitally important in rural areas. Rural hospitals rely heavily on Medicaid to operate. The closing of a rural hospital would be devastating to a local community as we have already experienced in Southwest Virginia. It severely impairs a locality’s ability to attract, recruit, and retain businesses and new residents.”
What could the “One Big Beautiful Bill” do to Medicaid funding in Virginia?
Analysis by the Congressional Budget Office shows that the reconciliation package is expected to reduce federal spending on Medicaid by $911 billion over the next 10 years.
About 76% of those cuts are slated to take place between 2030 and 2034, according to KFF. Cuts to Medicaid, along with other social safety net programs, were made in order to offset a portion of the cost to extend tax cuts that were set to expire at the end of the year.
Most of that $911 billion in cuts stems from work requirements for the Medicaid expansion group; limits to states’ ability to raise their share of Medicaid revenues through provider taxes; the restriction of state-directed payments to hospitals, nursing facilities and other providers; and an increase in barriers to enrolling in and renewing Medicaid coverage through new work requirements and other items, according to KFF, formerly known as the Kaiser Family Foundation.
The state’s Department of Medical Assistance Services projected that a change to the Medicaid Directed Payment Program policy in the reconciliation bill would cost Virginia hospitals more than $24 billion over the long term, according to a July 15 report to the Virginia General Assembly Joint Subcommittee for Health and Human Resources Oversight.
The Virginia Hospital and Healthcare Association estimated that policy changes passed in the reconciliation package would cost Virginia hospitals more than $2 billion annually.
Virginia hospitals are deeply concerned about the damage the reconciliation package could inflict on hospital stability, public health, the health care safety net, the economy and employment, said Julian Walker, spokesperson for the hospital association.
He pointed to a separate analysis by the Commonwealth Fund that projected nearly 500,000 health care jobs could be lost, including 13,200 in Virginia, in the next several years under the reconciliation plan.
Candidates for governor and their plans
Earle-Sears’ campaign did not respond when asked if the lieutenant governor would share her policy platform regarding access to Medicaid in Virginia.
The campaign of Earle-Sears’ Democratic opponent, former Congresswoman Abigail Spanberger, provided her health care policy platform following a request from Cardinal News, which included prioritizing Medicaid access in Virginia.
Spanberger’s health care policy platform includes:
- “Cracking down” on pharmacy benefit managers, which, the campaign said, are responsible for inflating prescription drug costs;
- Allowing more Virginians to use the pharmacy of their choice by banning pharmacy benefits managers from narrowing their options;
- Improving hospital price transparency;
- Preventing Virginians from going bankrupt due to an unexpected medical emergency;
- Stopping “predatory billing practices and holding scammers accountable for ripping off Virginians”; and
- Improving access to affordable healthcare options — like telehealth — in Virginia’s rural and underserved communities.
Spanberger’s campaign said the former Congresswoman would “use every resource at the commonwealth’s disposal to protect Virginians’ access to healthcare they can afford,” when asked about her plan to protect access to Medicaid. The campaign said that includes “working with the General Assembly to confront the impacts on Virginia’s budget, working with the Attorney General to defend critical programs Virginians rely on, and protecting access to healthcare providers – including rural hospitals, community health centers, and free clinics – that serve vulnerable communities who will see the most devastating cuts to healthcare in modern American history.”
The campaign also said that the former Congresswoman would invest in modernizing and building digital infrastructure, and build out additional administrative support to help people navigate the new requirements for Medicaid eligibility.
This article was updated at 9:54 a.m., Aug. 12, to include a response from Spanberger’s campaign.
For more on where the candidates for governor stand, see our Voter Guide.
Coming soon: We’ve sent questionnaires to every House of Delegates candidate in the state and all local candidates in Southwest and Southside. Friday is their deadline to repond. After that, we’ll be posting their responses in our Voter Guide.
