Health care spending per person in the commonwealth grew 31% between 2013 and 2021, totaling $7,178 per person in 2021, and 8% of residents are uninsured. This has left many struggling to cover the cost of their medical bills and wondering what they are getting in return. But while much of the discussion surrounding health care has focused on the financial burden to patients, local hospitals are also under great financial pressures and struggling to keep up with the increased cost of medical equipment and personnel.

In Virginia, 25% of all rural hospitals are at high risk of closing, representing $154.5 million in annual revenue, 5,355 annual patient discharges and 1,234 employees. Of these high-financial-risk rural hospitals, 80% are considered highly essential to the community, and failure to act prudently may lead to hospital closures, making it even more difficult for Virginians to receive treatment.

For starters, the growing shortfall in government reimbursements to hospitals must be reversed. The American Hospital Association (AHA) found that Medicare and Medicaid reimbursement shortfalls grew by $19 billion from 2015 to 2017 alone. But counterintuitively, Congress is now debating legislation to further limit reimbursements and shift more costs to hospitals.

A new bill from U.S. Sen. Bernie Sanders, I-Vermont, looks to expand the use of “site-neutral payments,” a one size, one price fits all, de facto government price control for Medicare and Medicaid payments. This would have devastating consequences for hospitals and the health care services by setting reimbursement rates based on the lower costs of outpatient treatments at nonhospital settings, such as physicians’ offices. The fatal flaw of these payments is they do not take into account the vastly different operating expenses incurred by hospitals and Hospital Outpatient Departments (HOPDs), which are not comparable to a physician’s office with much lower overhead.

Hospitals are dependent on these higher payments to cover the additional costs that come with running a facility that is staffed 24/7 and provides a much wider breadth of medical services than a physician’s office. But given the fact that hospitals, on average, receive only 87 cents for every dollar they spend caring for Medicare and Medicaid beneficiaries, they have historically been left to find other ways to make up the shortfall. Congress should reject efforts — such as site-neutral payments — to further cut reimbursements to already struggling hospitals, as this will only make it harder for these facilities to keep their doors open.

The health insurance oligopoly that has emerged in the past decade, meanwhile, has conspired to drive up costs to consumers while cutting reimbursement rates to hospitals, further exacerbating the situation.

In Virginia, two health insurers (Anthem and Carefirst) control more than 50% of the market and have used this disproportionate market power to increase the combined totals of average premiums and deductibles for family coverage by 91.3% since 2008. But despite the higher prices consumers are paying, many feel they are not getting more value for their money. One in 5 Virginians have made the decision not to fill a prescription due to cost concerns, and more than 40% of underinsured people skipped or delayed medical care or medications for fear of surprise bills.

The current situation has placed rural Virginia hospitals in a bind. Insurers like Anthem Blue Cross Blue Shield have been consistently underpaying reimbursements and inappropriately denying coverages, leaving hospitals to absorb the costs. This, combined with lower reimbursement rates, means that more than a third of rural hospitals in the commonwealth are now operating on negative margins and serving communities that are becoming more reliant on charity care. Efforts should be undertaken to encourage the health insurance market to self-correct these imbalances, but if this is not successful, policymakers may need to intervene.

Since 2005, nearly 200 rural hospitals have closed across the country, and another round of closures could prove devastating to the 26% of Virginians who live in rural communities. A unique set of challenges burdens rural hospitals, and Virginia’s congressional representatives who sit on committees that oversee health care issues, such as U.S. Rep. Morgan Griffith and U.S. Sen. Tim Kaine, should be mindful of them when setting policy.