Rural hospitals will be hit hard by Trump’s signature spending package: commentary

The public health provisions in the large spending bill signed into law by President Donald Trump on July 4, 2025, will cause an estimated 11.8 million people to lose their health insurance coverage and cut Medicaid expenditure by more than US$1 trillion over a ten-year period.

The 66 million people who live in rural America—nearly one in five Americans—will be disproportionately impacted by these Medicaid expenditure cuts and the Affordable Care Act’s modifications, according to our research on rural health and health policy.

Rural residents have a higher likelihood of having Medicaid-covered health insurance and are more likely to lose it. We anticipate that as a result of this new law’s amendments, hospitals will be required to give more unpaid care. Small, neighborhood hospitals will therefore have to make difficult choices, such as reducing or discontinuing services, firing employees, and postponing the acquisition of new machinery. Numerous rural hospitals may have to cut back on services or perhaps close completely.

Hits to rural health

Changes to Medicaid, the largest government rollback of health insurance coverage in the U.S. to date, have the budget legislation’s biggest impact on rural America.

First, by limiting the sources of funding that states can utilize to sustain their Medicaid programs, the legislation modifies how states can finance their portion of the program. This measure restricts how states can tax and charge hospitals, managed care organizations, and other healthcare providers. It also restricts how states can utilize these taxes and fees to pay Medicaid providers greater rates in the future. Due to these restrictions, rural hospitals that rely on Medicaid to remain open will get lower payments.

Second, states are required to implement work requirements by 2027 that compel the majority of Medicaid users to work 80 hours per month or attend school at least half-time.Arkansas’s 2018 brief experience with work restrictions shows that, instead of increasing employment, the policy makes things more bureaucratic and makes it harder for qualified individuals to get health care benefits. Additionally, states would now have to confirm Medicaid eligibility every six months rather than once a year. Due to additional red tape, the shift also raises the possibility that people will lose their coverage.

The Congressional Budget Office projects that around 5 million people will lose their Medicaid coverage as a result of the work requirements imposed by this legislative package. This would further hurt rural hospitals’ capacity to remain open by reducing the number of paying patients they see and increasing the amount of unpaid treatment they must deliver.

The law also modifies the requirements for individuals to be eligible for the premium tax credits offered by the Affordable Care Act Marketplace. This move, coupled with other ACA adjustments like shorter and shorter enrollment periods and more requirements for proving income, is expected to lower the number of people insured through the ACA Marketplace by roughly 3 million by 2034, according to the Congressional Budget Office. During the COVID-19 pandemic, premium tax credits were increased, assisting millions of Americans who had previously had difficulty obtaining coverage. This law may cause an extra 4.2 million people to lose their insurance by allowing these increased tax credits to expire.

An insufficient stop-gap

Concerns regarding the legislation package’s possible impact on the financial stability of rural and frontier hospitals—those situated in isolated locations with fewer than six people per square mile—have been raised by senators on both sides of the aisle. Consequently, the Senate decided to allocate $50 billion for a new Rural Health Transformation Program over the following five years.

There are two methods to distribute these monies. States that apply with a rural health transformation plan outlining how remote hospitals will enhance the quality and delivery of healthcare will get half of the funds directly and evenly. The remaining cash will be allocated to states in different proportions using an as-yet-unknown procedure.

More money to help rural health institutions is a good thing, but how it is allocated and how much is available will be crucial. According to estimates, federal spending in rural regions will be cut by $155 billion over the course of ten years, with the majority of that drop occurring in 12 states with high percentages of rural inhabitants that expanded Medicaid under the Affordable Care Act.

Accordingly, Medicaid and other program cuts that will lower the amount of money going to rural health facilities cannot be compensated for with $50 billion.

Accelerating hospital closures

Geographic isolation, outdated infrastructure, older and sicker patient populations, and increased financial and regulatory responsibilities have all contributed to the long-standing difficulties faced by rural and frontier hospitals. 153 rural hospitals have either permanently closed or stopped offering inpatient services since 2010. States that have decided not to extend Medicaid through the Affordable Care Act, many of which have higher proportions of their citizens living in rural regions, are especially affected by this trend.

As of June 2025, hospitals could reduce essential services like skilled nursing facilities, switch to another kind of healthcare institution like a rural emergency hospital, or close completely, according to a study conducted by academics at the University of North Carolina.

Particularly at risk is maternity care.

For many people in rural Oregon, access to maternity care is more important than worries about getting an abortion.

For some women in Baker City, worries about abortion have swiftly given way to finding out how to get the care they need to give birth safely.

Over half of rural hospitals no longer do deliveries. Compared to institutions in more populous areas, fewer patients are served by rural facilities. They rely on Medicaid payments, which often pay lower rates than commercial insurance, and have high fixed costs because to the large number of Medicaid patients they treat. These units will keep closing as a result of these pressures, forcing women to give birth outside of conventional hospital settings, before full term, and after traveling further.

Additionally, hospitals in remote locations have less negotiating leverage to get reasonable equipment and supplies from medical businesses and fair and acceptable reimbursement from private health insurers because they serve relatively small populations. It is costly to hire and keep the necessary doctors and other healthcare professionals, and it is becoming more and more difficult to obtain funding for facility renovations, expansions, or construction.

Lastly, the legislation’s Medicaid cuts will disproportionately lower the rate at which Medicaid pays rural clinicians and health institutions for services they deliver, since rural individuals are more likely than their urban counterparts to obtain Medicaid. This will put already financially precarious hospitals on an accelerated route to doom, as many rural hospitals are already on the verge of closing.

Far-reaching effects

Hospitals in rural areas offer more than just local medical care. They are also important sources of economic growth.

Residents are forced to choose between forgoing necessary treatments or driving greater distances to visit a doctor as a result of hospital closures, which eliminate local access to healthcare.

However, these areas’ hospitals are also significant employers, frequently offering some of the best salaries in the area. Their closure may cause the local tax base to diminish, which would reduce the amount of money available for public services like roads and schools and make it more challenging to draw in and keep the businesses that small towns rely on. Local economy are weakened by declines in rural health care.

In addition, rural America is the primary supplier of food, fuel, and other natural resources for the entire nation. We believe that further undermining rural hospitals could have an impact on the state of the American economy as a whole, not just on local economies.

The Conversation has reprinted this article.Go through the original article.

Lauren S. Hughes is an associate professor of family medicine at the University of Colorado Anschutz Medical Campus and the state policy director for the Farley Health Policy Center.

Kevin J. Bennett is a University of South Carolina family and preventive medicine professor.

About The Author