Rural hospitals would lose $50 billion in Medicaid cuts

Hospital leaders are arguing that if Congress signs off on legislation that would lead to Medicaid cuts, rural Americans would pay the price.

Rural hospitals would lose billions of dollars in funding from Medicaid under legislation before the Senate, according to a new analysis by the American Hospital Association.

As many as 1.8 million Americans living in rural communities would lose coverage by 2034, according to a new analysis released by the American Hospital Association Monday.

In addition, rural hospitals would lose $50.4 billion in federal Medicaid funding over the next decade, under provisions in The One Big Beautiful Bill Act (H.R. 1), the hospital association says. The House of Representatives approved the package last month and it’s now before the Senate.

The hospital association broke down the losses in Medicaid funding by state, and some of those most affected aren’t necessarily the largest states by population.

Kentucky would lose the most Medicaid funding to rural hospitals, with an estimated loss of slightly more than $4 billion through 2034. After Kentucky, the biggest projected losses would be in North Carolina ($2.98 billion), Iowa ($2.66 billion), Ohio ($2.49 billion), and Oklahoma ($2.37 billion).

It’s worth noting that each of the five states with the biggest projected losses in Medicaid funds for rural hospitals voted for President Trump in the 2024 election.

Three other states would lose more than $2 billion in funding for rural hospitals: California, Illinois, and Michigan.

The Congressional Budget Office, a nonpartisan research arm of Congress, estimates that 10.9 million Americans would lose coverage under the legislation, the Associated Press reports.

The American Hospital Association projects Kentucky would see the largest number of rural residents (142,000) losing coverage, followed by California (nearly 135,000), Ohio (86,000), Oregon (83,600), and North Carolina (82,000).

The House legislation would include work requirements for able-bodied adults, and Republicans have said that’s a sensible provision to ensure that Medicaid coverage is available for those who truly need it and aren’t able to work. Critics say most Medicaid recipients are working or caring for individuals with significant disabilities requiring constant care.

Catholic hospitals leaders have been outspoken in denouncing proposed reductions in Medicaid coverage, and they highlighted the risks to rural hospitals in a webinar last month.

Joe Hodges, regional president for SSM Health in Oklahoma, highlighted the impact of Medicaid cuts on patients in rural communities, and the fallout for rural hospitals.

“It is a crisis in rural health care,” Hodges said. “Any challenges that are associated with taking away access or funding to rural hospitals will make them even more vulnerable. That is why it is really important for us to advocate for rural health care as well as urban health care.”

Hospital leaders also argue that if fewer Americans have health coverage through Medicaid, then health systems will end up providing more uncompensated care and experience more financial pressures. And rural hospitals aren’t equipped to take on additional financial stress, hospital leaders say.

About half (48%) of America’s rural hospitals lost money in 2023, according to the Chartis Center for Rural Health. Over the past decade, 92 rural hospitals have closed their doors or stopped providing inpatient services, according to an American Hospital Association analysis of data from the Cecil G. Sheps Center for Health Services Research.

Many rural hospitals are pulling back on certain services to keep the doors open. Since 2011, 267 rural hospitals have stopped providing obstetric services, according to the Chartis Center.

Becky Hultberg, president of the Hospital Association of Oregon, told Chief Healthcare Executive in an interview last month that hospitals across Oregon are struggling, including rural hospitals. The loss of federal Medicaid funds could push some rural Oregon hospitals past the brink, which would devastate those communities.

“If you lose a hospital in rural Oregon, patients are driving hours to the next hospital,” Hultberg says. “Communities may dry up and go away if there's no health care in the community. So the implications to rural communities are different than the implications to urban communities if a hospital fails, but we're certainly seeing financial challenges in both environments.”