Hospitals say Medicaid cuts could hurt state’s economy

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Virginia hospitals warned today that proposed cuts in the state’s Medicaid program could cost jobs, damage the economy and drive up premiums for privately insured residents.

At a Capitol Square new conference, the Virginia Hospital & Healthcare Association (VHHA) said the state economy could take a $2.6 billion hit and lose more than 6,000 jobs if the state cuts Medicaid spending by $720 million.

The General Assembly is trying to plug a $4.5 billion hole in its budget over the next biennium. Former Gov. Timothy M. Kaine proposed $420 million in Medicaid cuts before his term ended in January. However, his budget included a proposed income-tax increase that was quickly voted down by the House of Delegates.

In attempting to find another $2 billion in budget cuts, Gov. Bob McDonnell today proposed a $316 million reduction in spending for health and human services programs, including Medicaid.

Laurens Sartoris, president of the VHHA, pointed out that the state House and Senate budget committees have yet to make their budget proposals. He noted state Medicaid dollars are matched by the federal government, turning a $720 million state cut into a $1.4 billion reduction in spending. Sartoris predicted that drop in spending would cause a ripple effect lowering economic activity another $1.2 billion.

The 6,020 lost jobs projected by the association include 3,363 health-care positions and another 2,657 in the larger community.

A number of hospital administrators and board members at the news conference noted that Virginia currently ranks 48th in the country in per-capita Medicaid spending. Nancy Howell Agee, COO and president of the hospital division at Roanoke-based Carilion Clinic, said the state pays only 72 cents for every dollar spent by hospitals in treating Medicaid patients.

Businessman Joseph R. Wilson, the past chairman of Mary Washington Healthcare in Fredericksburg, predicted that the increasing losses hospitals incur in treating Medicaid patients will result in higher charges and insurance premiums for privately insured patients.

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