Rural hospitals prepare for financial hits, potential closures under GOP's $1 trillion Medicaid cut

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FILE-An interior view of a hospital recovery room. (Photo by Richer Images/Construction Photography/Avalon/Getty Images)

States and health advocacy groups are warning that Congress’ slashing of Medicaid in President Donald Trump’s sweeping spending bill, which was passed in the House on Thursday, will devastate already financially vulnerable rural hospitals.

The Associated Press reported that Congress is planning roughly $1 trillion in Medicaid cuts over the next 10 years. Medicaid is a program that serves millions of low-income and disabled Americans.

Struggling hospitals would be impacted more by Medicaid cuts

Why you should care:

States and advocacy groups contend that cutting Medicaid would hit rural hospitals substantially and may force hundreds to close, leaving some individuals in these communities without available emergency care.

Citing analysis by the Cecil G. Sheps Center at the University of North Carolina at Chapel Hill, the Associated Press reported that over 300 hospitals may be in danger of closing under President Donald Trump’s spending bill. 

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The AP noted that a health clinic in Curtis, Nebraska announced on July 2 that it plans to close in the coming months, in part due to the looming Medicaid cuts. 

Dozens of states will lose Medicaid funding 

Big picture view:

According to a KFF report 36 states will lose $1 billion or more over 10 years in Medicaid funding for rural areas under the Republican tax bill, even with the $50 billion rural fund.

Moreover, Kentucky is likely to lose more with the KFF report projecting that the state would lose a staggering $12.3 billion, nearly $5 billion more than the next state on the list. This would happen because the GOP legislation will end Kentucky's Medicaid reimbursement system, minimizing it to Medicare reimbursement levels.

The Associated Press reported that Kentucky has one of the lowest Medicare reimbursement rates in the nation, and has one of the highest poverty rates, leading to a third of its population being covered by Medicaid.

During an appearance on MSNBC, Kentucky Gov. Andy Beshear said the Republican bill would close 35 hospitals in his state and pull health care coverage for 200,000 residents.

Experts argue the spending bill's $50 billion fund for rural hospitals isn't enough

By the numbers:

According to the KFF, a nonprofit that examines health care issues, over 20% of Americans reside in rural areas, where Medicaid covers 1 in 4 adults. 

President Donald Trump’s $4.5 trillion spending bill would deepen rural hospitals’ financial challenges by cutting a top federal program that helps states fund Medicaid payments to health care providers. 

To neutralize the lost tax revenue, Trump’s legislation includes $1.2 trillion in cuts to Medicaid and other social safety net programs.

However, the Associated Press reported that public clamoring over Medicaid cuts led Republicans to include a stipulation that will provide $10 billion annually to support rural hospitals over the next five years, or $50 billion in total. But rural hospital advocates tell the AP they are concerned this funding won’t be enough.

Carrie Cochran-McClain, chief policy officer with the National Rural Health Association, shared with the AP that rural hospitals already struggle to break even financially, citing a recent American Hospital Association report that found that hospitals in 2023 received roughly $28 billion less from Medicaid than the actual cost of treating Medicaid patients.