Medicaid Cuts Pose Risk to Over 400 Hospitals Nationwide
According to a report, over 400 hospitals across the U.S. are facing serious threats of closing or scaling back services due to Medicaid cuts included in President Trump’s “Big and Beautiful Bill.” This analysis comes from a progressive watchdog group, Public Citizen.
The repercussions could be significant, making it more challenging for millions of individuals to access the care they need. Job security for thousands of healthcare workers is also in jeopardy as these hospitals stand to lose crucial federal funding, with Medicaid accounting for about one-fifth of all hospital expenditures.
The expected cuts to Medicaid will roll out gradually, starting with work requirements in 2027 and funding restrictions for states in 2028. Overall, this legislation aims to reduce federal Medicaid funding by approximately $1 trillion over the next decade.
Eileen O’Grady, a research fellow at Public Citizen Congress Watch and co-author of the report, notes, “We are witnessing hospitals that are already under financial strain making tough choices to stay afloat.” She emphasizes that this situation inevitably affects the local community and can create a ripple effect impacting other hospitals nearby.
The analysis looks at financial data from the Centers for Medicare and Medicaid Services for the period 2022-2024, covering around 95% of U.S. hospitals. The at-risk hospitals are defined as those that have been operating at a loss in recent years, with Medicaid and other low-income programs making up at least 20% of their revenue.
However, the report doesn’t specify when these hospitals might close or reduce services.
“While closure is the worst possible outcome, hospitals may need to make tough decisions about cutting services that are vital to their communities but no longer financially sustainable,” O’Grady adds.
Hospitals across the nation are already warning that they may need to lay off staff or reduce essential services, such as maternity and mental health care, due to these cuts.
For many, hospitals represent the last option when treatment alternatives are limited.
“When hospitals shut down, patients don’t receive the necessary care,” states Gideon Lukens, director of research and data analysis for the Center on Budget and Policy Priorities. “They might have to travel further or endure longer wait times at other overburdened hospitals. That added delay could be crucial for life-saving treatments.”
Hospital closures also place extra pressure on remaining facilities to accept more patients. O’Grady explains that this can lead to reduced time and resources for doctors, ultimately compromising the quality of care provided.
“It’s very risky for hospitals to be under this kind of stress,” she warns.
The analysis identified a total of 446 hospitals at risk, with at least one such facility in 44 states and Washington, D.C.
While discussions mainly center around the impact on rural hospitals, around 60% of those at risk (about 267 facilities) are located in urban areas. Cuts are expected to disproportionately affect Black and Latino communities.
Interestingly, these at-risk hospitals are found in both Democratic and Republican-led states, with California, New York, Illinois, and Washington having the highest concentrations. Additionally, some congressional districts represented by Republicans contain a significant number of at-risk hospitals.
Zachary Levinson, project director of the KFF Project on Hospital Costs, points out that these Medicaid cuts could deepen an ongoing crisis, particularly for rural hospitals.
He mentions that, although Trump’s legislation earmarks $50 billion to assist rural areas, it could result in much larger cuts—around $137 billion over ten years—in federal Medicaid spending in these regions.
James Jackson, CEO of Alameda Health System in Oakland, California, has described these proposed Medicaid cuts as an “existential threat.” Alameda derives around 60% of its revenue from Medicaid and announced plans to lay off nearly 300 employees while facing potential losses of over $100 million annually by 2030. Though this facility wasn’t on the Public Citizen list of at-risk hospitals, it highlights ongoing financial difficulties.
The planned job cuts were initially set to take effect in March but have now been postponed. Proposed reductions could also impact mental health services and programs for chronically ill patients.
Jackson conveyed that, while closures are not being considered, the system is still evaluating service reductions. “I don’t anticipate any positive outcomes from these changes,” he remarked. “As the last resort provider, if we cannot offer services, it could lead to delays or a complete lack of care elsewhere in the community.”
Trinity Health, a Michigan-based hospital system with operations in multiple states, has projected a loss of $1.5 billion due to recent and forthcoming government policy changes. In January, they disclosed layoff plans affecting 10.5% of their billing staff. One of their facilities, St. Mary’s Sacred Heart Hospital, closed its obstetric unit as of last October.
A spokesperson from Trinity Health reiterated concerns about potential further cuts from the federal government, stressing that absorbing such a financial blow would not be feasible without making significant adjustments.
