Medicaid cuts threaten hundreds of hospitals, new report finds

More than 400 hospitals across the United States are at high risk of closing or eliminating services because of Medicaid cuts in President Donald Trump’s “big, beautiful bill,” according to an analysis by the progressive watchdog group Public Citizen.

The consequences could make it harder for millions to access care and put thousands of health care worker jobs at risk as hospitals lose a key source of federal funding. Medicaid covers about one-fifth of all hospital costs.

The Medicaid cuts are coming in stages, with bigger changes, including work requirements, in 2027 and limits on how states raise money in 2028. Overall, the law is expected to reduce federal Medicaid funding by about $1 trillion over the next decade.

“We’re seeing hospitals already facing serious financial difficulties having to make decisions about how to remain financially solvent,” said Eileen O’Grady, a researcher at Public Citizen’s Congress Watch and author of the report. “That has pretty clear implications for people who live in that community. It also has ripple effects on other hospitals in those communities.”

The analysis draws on hospital financial data from the Centers for Medicare and Medicaid Services from 2022 to 2024, covering approximately 95% of U.S. hospitals. The group defined at-risk hospitals as those in which Medicaid and other low-income government programs accounted for at least 20 percent of revenue and which have operated at a loss in recent years.

The report does not assess when hospitals might close or reduce services.

“Closure is the worst-case scenario, but it also doesn’t stop hospitals from having to make very difficult decisions about cutting services that could be essential to these communities but are simply no longer financially viable,” O’Grady said.

Across the country, hospitals have already issued statements warning that they may have to lay off staff or reduce care, including maternity and mental health care, because of Medicaid budget cuts.

For many patients, hospitals are the last place to turn when there are few or no other care options.

“When hospitals close, patients have less access to the care they need,” said Gideon Lukens, director of research and data analysis on the health policy team at the Center on Budget and Policy Priorities, a nonpartisan research group. “They have to travel further or wait longer at other hospitals that become overcrowded. This extra time can mean the difference between the success and failure of urgent and potentially life-saving treatments.”

The closures also add pressure to hospitals taking on additional patients. O’Grady said doctors end up having “less patience, less time, less ability to provide the highest quality care.”

“It can be very dangerous for hospitals to be put under this kind of pressure,” she said.

The analysis found a total of 446 hospitals at risk, with at least one hospital at risk in 44 states and Washington, DC.

About 60 percent of at-risk hospitals — 267 facilities — are in urban areas, although much of the debate around Medicaid cuts has focused on rural hospitals. Blacks and Latinos will be hardest hit by budget cuts.

Hospitals cover both Democratic- and Republican-led states, although the states with the highest number of at-risk hospitals are California, New York, Illinois and Washington.

Republicans also represent several congressional districts with the highest number of high-risk hospitals. House Republicans who voted for the Medicaid cuts have 196 at-risk hospitals in their districts, while Senate Republicans — all of whom support the cuts — account for 146 at-risk hospitals in their states, according to the analysis.

The cuts could lead to a worsening crisis, especially for rural hospitals, said Zachary Levinson, director of the KFF Hospital Costs Project.

He said that, by his estimates, the Trump law provides $50 billion to support rural communities, but could reduce federal Medicaid spending in rural areas much more — about $137 billion over a decade.

James Jackson, CEO of Alameda Health System in Oakland, California, said Medicaid cuts pose an “existential threat.”

Alameda Health System, which gets 60% of its revenue from Medicaid payments, announced in December that it would lay off nearly 300 employees and lose more than $100 million a year by 2030. (The health network was not on Public Citizen’s at-risk list, although the report highlighted its financial woes.)

The layoffs, which were set to take effect in March, have since been delayed.

The proposed cuts included mental health services, care for patients with chronic illnesses and an outpatient plastic surgery program. Jackson said closing hospitals is not an option, but the system continues to consider a reduction in services.

“I don’t think the impact will be positive,” he said. “We are often the provider of last resort, so if we are unable to provide a service, there will be a delay in receiving care in one of the other systems in the area or they may not provide it at all.” »

Trinity Health, a Michigan-based hospital system with facilities in other states, said it is expected to lose $1.5 billion due to “recent and future changes in government policy.”

In January, it announced it was laying off 10.5% of its billing staff. One of its hospitals, St. Mary’s Sacred Heart Hospital in rural northeast Georgia, announced last October that it was closing its maternity unit.

In a statement, a Trinity Health spokesperson shared a previous statement that said in part that “more reductions” are being considered by the federal government and that it is “not possible to simply absorb such a significant financial impact without making thoughtful, forward-thinking changes.”