More than 60 million Americans get their health care from rural hospitals, which in many states can be the lifeblood of a community. They are not only the primary source of emergency, preventive, and specialized care, but also jobs and much-needed tax revenue.
Now, President Donald Trump’s newly minted domestic policy bill could force closures and deep cuts in care at rural hospitals, which were already struggling to stay afloat amid razor-thin operating margins and other financial stress, according to lawmakers, hospital groups and health care experts.
The legislation, called the One Big Beautiful Bill Act, extends Trump’s 2017 tax cuts and implements his agenda to improve border security, cut taxes and slash government spending.
Trump’s bill cleared the House of Representatives and Senate and was signed into law by the Republican president at a glitzy White House ceremony that included a B-2 bomber flyover on Independence Day, July 4.
With a price tag of nearly $4 trillion, the plan calls for deep cuts to clean energy programs, food assistance, and Medicare and Medicaid — potentially removing millions of Americans from the federally backed health insurance programs. Cuts to Medicaid spending alone could add up to $1 trillion over the next decade.
Many Americans may not immediately feel the pinch because GOP lawmakers opted to delay most of the health care cuts until after the November 2026 midterm elections.
But health care industry officials say the federal government’s cost-cutting will ultimately have a crippling impact on the nation’s rural hospitals, which were already in crisis mode over labor shortages, rising medical costs, declining reimbursements from private insurers and other financial pressures.
“Despite months of clearly demonstrating the implications that these Medicaid proposals will have on the patients and communities we serve, especially the most vulnerable populations, Congress has enacted cuts of nearly a trillion dollars to the Medicaid program,” said Rick Pollack, president and CEO of the American Hospital Association. “The real-life consequences of these reductions will negatively impact access to care for all Americans.”
Cuts will slam rural hospitals
Nearly half of all America’s rural hospitals are operating on negative margins, recent studies have shown. Hundreds are at risk of closure.
Rural hospitals are heavily reliant on Medicaid, which is jointly funded by the federal government and states. States cover upfront costs of care and are reimbursed by the federal government for at least 50% of the costs.
Akeiisa Coleman, senior program officer for Medicaid at The Commonwealth Fund, a New York-based public interest group, said rural and safety-net hospitals in cities that serve disproportionate numbers of Medicaid patients generally operate on a string.
That means they have “less wiggle room” when costs suddenly increase, she said, or if there is a dramatic change in the number of insured patients, as could happen with Trump’s bill. Rural hospitals rely heavily on Medicaid funding because they typically serve a higher share of low-income patients.
“It puts additional financial pressures on facilities and it makes it harder for them to keep their doors open,” Coleman said.
Trump’s bill includes nearly $1 trillion in cuts to Medicaid, mostly through work requirements, as well as a change to how states are able to help fund their programs, known as the provider tax.
That could mean millions of people who are insured by the program could suddenly find themselves without healthcare coverage. and for rural hospitals already at risk of closure, that could be the tipping point, Coleman said.
“There are a significant number of people who will be losing marketplace coverage, and not all of them will be able to transition to other types of insurance coverage,” she said. “So there’s a very real chance that rural hospitals, and even some safety-net hospitals in urban areas, could close.”
Trump’s bill does include a $50 billion safety-net fund for rural hospitals. Those funds will be distributed by the Centers for Medicare and Medicaid Services over five years. But experts say that won’t go far enough to offset the impact of the cuts.
On average, rural hospitals are slated to lose 21 cents out of every dollar they receive in Medicaid funding under the bill, according to a recent report by the Rural Health Association and Manatt Health.
Total cuts in Medicaid reimbursement for rural hospitals — including both federal and state funds — over the 10-year period covered by the bill would reach almost $70 billion for hospitals in rural areas, the report’s authors said.
“The proposed changes to Medicaid will result in significant coverage losses, reduce access to care for rural patients and threaten the viability of rural facilities,” said Alan Morgan, CEO of the National Rural Health Association. “It’s very clear that Medicaid cuts will result in rural hospital closures, resulting in loss of access to care for those living in rural America.”
No state unscathed
Nationwide, more than 330 at-risk hospitals in a small handful of states face closure under Trump’s bill, according to a new report by the Cecil G. Sheps Center for Health Services Research at the University of North Carolina, commissioned by a group of Democratic lawmakers.
Kentucky could lose up to $28 billion of federal funding for the program over the next 10 years, and there are 35 rural hospitals at risk of closing, the highest number in the nation, the report’s authors said.
Texas has 15 rural hospitals at risk of closing, while New York has 11, according to the report. Indiana has 12 rural hospitals on the list and Ohio has 11.
In Oklahoma, where nearly one in every four residents relies on Medicaid, rural hospitals across the state are bracing for deep cuts and job reductions, and delaying new services and health care expansions on hold in anticipation that the Medicaid cuts could become law.
The Sheps Center report shows that at least 21 rural hospitals in the state could be forced to close as a result of the Medicaid cuts being considered by Congress.
“You can’t take $600 million out of our system and not have there be pain in all four corners of our state,” said Rich Rasmussen, president and CEO of the Oklahoma Hospital Association. “These cuts are going to have a devastating impact on our hospitals.”
The health policy research group KFF estimates that the legislation will lead to about 17 million people losing coverage due to the changes in Medicaid and the Affordable Care Act.
In some states, like New Hampshire, Indiana and North Carolina, the concern about the impact of federal Medicaid cuts is twofold.
Those states have so-called “trigger” laws mandating that if federal funding for expanded Medicaid programs falls below 90%, the state will revoke its portion of the funding, which could leave millions more people without health insurance.
Small rural hospitals are often responsible for delivering most of the health care services for people living in the communities they serve, including long-term care and primary care. In some cases, they can be the only source of emergency and specialized care, like obstetrics and mental health services.
But rural hospitals also tend to be the largest employers in a community, providing good-paying jobs and supporting the local tax base.
“So if you lose the ability for that community to hold on to them, you lose their tax base, you lose their ability to pay for their homes,” Rasmussen said. “It has a ripple effect.”
Christian M. Wade covers Massachusetts politics and government for CNHI’s North of Boston Media Group. He can be reached at cwade@cnhinews.com.
Just The Facts The 11 New York hospital at risk of closing under Medicaid cuts include: Wyoming County community Hospital — Warsaw Newark Wayne community Hospital — Newark Geneva, General Hospital — Geneva Bon Secours Community Hospital — Port Jervis Westfield Memorial Hospital —- Westfield Clarkston Hepburn Memorial Center — Ogdensburg Massena Memorial Hospital — Massena Garnett health Medical Center — Catsk-Harris Clifton-Fine Memorial — Star Lake Gouverneur Hospital — Gouverneur Lewis County General Hospital — Lowville