The Republican-led budget bill is triggering alarms across rural America. The legislation, passed July 4, 2025, slices roughly $1 trillion from Medicaid over the next ten years. That’s not a theoretical trim. That’s a direct hit to the operating cash of hospitals that rely on Medicaid reimbursements to stay open. According to the Cecil G. Sheps Center at UNC Chapel Hill, more than 300 hospitals are now flagged as high-risk for closure, conversion, or service cuts. These aren’t urban giants. These are small-town lifelines.
The numbers are brutal. In Kentucky alone, 35 hospitals could shut down. That’s tied to a projected $12.3 billion loss in Medicaid funding for the state. Kentucky’s unique reimbursement system is being flattened to match Medicare levels, which are among the lowest in the country. One-third of the state’s population is on Medicaid. Half the kids. That’s not a rounding error. That’s a collapse.
Nebraska’s already feeling it. A clinic in Curtis announced it will close this fall. The CEO blamed the financial environment created by the bill. Webster County Community Hospital, serving 3,000 residents, says it may lose its ER, nursing home, and clinic. That’s a five-minute drive turning into an hour-long ambulance ride. That’s not manageable.
Nationwide, rural hospitals are operating on margins thinner than paper. Medicaid payments in 2023 fell $28 billion short of covering actual treatment costs. More than 20% of Americans live in rural areas. One in four adults there depend on Medicaid. The bill’s $50 billion rural hospital fund is spread over five years. That’s $10 billion annually. It doesn’t plug the hole.
Day Kimball Hospital in Connecticut says 30% of its patients are on Medicaid. That jumps higher for obstetrics and behavioral health. The CEO says the Senate’s $155 billion rural Medicaid cut will push them deeper into the red. If they close, thousands will be forced to drive an hour for care. That’s not sustainable.
The legislation also adds work requirements for able-bodied adults up to age 65. That’s 80 hours a month. The UC Berkeley Labor Center says older Americans between 50 and 64 will be hit hardest. They’re too young for Medicare. Many are managing chronic illness. They’ll lose coverage. They’ll show up in ERs uninsured. Hospitals will eat the cost or shut down.
The American Hospital Association says rural hospitals are already down 50 facilities since 2017. The trend line is steep. The bill accelerates it. The National Rural Health Association estimates a 21% drop in Medicaid funding for rural hospitals. Over a million rural residents could lose coverage. That’s not a policy tweak. That’s a system fracture.
Sources:
https://www.fox4news.com/news/rural-hospitals-trump-medicaid-cuts