CHARLOTTESVILLE, VA (CVILLE RIGHT NOW) – President Donald Trump’s decision to launch military action against Iran may benefit Virginia economically should it lead to increased defense spending, according to James Madison University professor of political science, Bob Roberts. That spending, he says, could also go as far as protecting Medicaid funding.

“The Trump administration has sent defense spending through the roof. And many of those contractors are located in Virginia,” Roberts told Cville Right Now. “So, I think you’re seeing what I call the Reagan defense scenario, where Virginia did very well during the 1980s, because Reagan spent a vast fortune on defense.”

According to the Commonwealth Institute, Department of Defense spending injected $68.5 billion into Virginia’s economy in fiscal year 2023, which is second only to Texas. That same year, federal civilian and military spending accounted for 8.9% of Virginia’s GDP in 2023, compared to 3.6% in the country as a whole. Virginia ranked fourth in the share of its economy that’s directly due to federal spending. The greater a state’s GDP, the higher its tax collections.

Virginia currently has a budget surplus, but Roberts says that may not be enough when President Trump’s One Big Beautiful Bill starts to go into full swing.

Roberts said between that and the state’s budget surplus, Virginia may be able to deal with Medicaid cuts from Trump’s One Big Beautiful Bill budget act. The questions are if defense spending will start to bring in more tax revenue and, if it does, for how long.

“That becomes a more problematic issue in terms of, if the surpluses continue, whether the state will have to use that surplus for covering Medicaid,” he said. “If they don’t do it, you’re going to possibly bankrupt some of the hospitals in the state. The rural hospitals are very much dependent upon that Medicaid funding.”

Roberts likens it to the The Pitt, a medical television drama that follows an emergency department dealing with staff shortages and underfunding, just as some rural hospitals are already dealing with.

“If they’re not getting the same levels of reimbursement, or large numbers of individuals who’ve been kicked off the health exchange start going to emergency rooms, then the unreimbursed care could drive some of these some of these hospitals to the brink,” he said. “That’s another thing down the road that we’ll have to look for in terms of 2026 and 2027. Some of the more rural hospitals can’t survive, so, then the state is going to have to step in.”

According to a 2026 report by the Center for Healthcare Quality & Payment Reform, almost one-third of America’s rural hospitals lost money overall in 2024-25. The report says eight in Virginia are at risk if closing, with five of them at immediate risk.

Roberts points out that, so far, there are no major budget cuts in the General Assembly at the state level.

“Early in the session, there were all these tax bills that we proposed, and the Republicans got all upset about all these tax bills that were going to raise all these taxes,” he said. “None of them got passed, and they’re not going to be passed. And the budget bill is not as bad as everybody thought it would be, since Virginia still has a rather large surplus.”