Around one-third of rural hospitals in the United States would close as a result of Medicaid cuts in the House Republican reconciliation bill, and hospitals could be even more greatly affected in the Senate plan.
Three hundred hospitals are at risk of immediate closure, and another 700, which encompass a third of rural hospitals, would be on shaky financial ground, according to a report from the Center for Healthcare Quality and Payment Reform.
So far, Senate Republicans have proposed even deeper cuts that would affect hospitals than the House text proposed. The changes are mainly to how hospitals receive funding as it would amend the Medicaid’s so-called provider tax. States charge extra taxes to medical providers, mainly hospitals and other healthcare providers, and then give the providers higher Medicaid payments. This brings in more federal funds that can be matched.
Democratic lawmakers in Congress have been vocally opposing these cuts, among other items, as the House reconciliation bill passed with no Democratic votes.
Sen. Ed Markey (D-MA) posted a thread on social media outlining every hospital in every state that is at risk of closure. In a statement, Sen. Ron Wyden (D-OR) criticized the proposed cuts.
“Senate Republicans would pay for those new corporate tax breaks by making even deeper cuts to Medicaid, slashing funding for rural hospitals and other essential health care providers and throwing cash-strapped states off a funding cliff,” Wyden said.
On the Republican side of the issue, Sen. Josh Hawley (R-MO) appears to be the most alarmed by the proposed cuts and their impact on hospitals.
“I don’t think they understand politically who our voters are,” Hawley told reporters, referring to Senate leadership. “But also, setting aside the politics of it, it’s just not the right thing to do to shut down a bunch of rural hospitals to pay for tax cuts.”
The Senate version would require states to gradually reduce provider taxes on hospitals until it is no larger than 3.5% of a provider’s net patient revenue. That threshold is currently around 6%, with the House bill capping provider taxes at that 6% rate.
Senate Majority Leader John Thune (R-SD) and Finance Committee Chairman Mike Crapo (R-ID) are considering adding a provision to the Senate bill to establish a fund for rural hospitals that would be affected by the loss of funds through taxes, according to Politico. The leaders have been speaking with Hawley and Sen. Susan Collins (R-ME), who has also voiced some concern.
Thune still expressed some support for restructuring provider taxes.
“We think they rebalance the program in a way that provides the right incentives to cover the people who are supposed to be covered by Medicaid,” Thune said, adding that leadership is continuing to “hear from our members specifically on components or pieces of the bill that they would like to see modified or changed or have concerns about. And we’re working through that.”
“The right thing to do is not defund rural hospitals to pay for your pet projects,” Hawley said. “So if you want your pet project in the bill, go find your own money. Don’t defund rural hospitals.”
The Senate bill also differs from the House bill in that it exempts the cap on two other main providers, nursing homes and facilities for disabled people, that were subject to the tax.
Hawley noted that rural hospitals in his state were “pretty satisfied” with the House language, along with some technical changes to it.
States that haven’t expanded Medicaid, like Florida and Texas, would get to keep their rates at their current levels. This proposed cap would affect 18 states, including Iowa, Indiana, Missouri, and Oklahoma, all of which have Republicans representing them in the Senate. Save for Hawley, those senators have not outwardly expressed concern over changes to the provider tax structure and the impacts on their state.
“The Senate just made a bad bill worse,” Chip Kahn, CEO of the Federation of American Hospitals, said in a statement. “Rural communities would take the hardest hit, with struggling hospitals compelled to face difficult decisions about what services to cut.”
West Virginia residents might have the most to lose in the equation, as it is a mostly rural state and has one of the highest shares of residents on Medicaid. Sens. Shelley Moore Capito (R-WV) and Jim Justice (R-WV) had expressed some resistance to cutting Medicaid, but have not said they would vote down the bill at its current state.
“We’re talking to them,” Capito said in reference to Senate leadership. “Obviously, they’re concerned about the provider taxes.”
Justice has been critical of the overhaul of the provider tax. He told reporters last week that those cuts would “hurt” but that “it may very well be you’ve just got to hold your nose on part of it and get through it.”
Senate Republicans can lose only three votes to pass the megabill so long as Senate Democrats remain united in their opposition. The Senate is looking to pass its version by July 4, a deadline President Donald Trump has said he is looking to. The legislation would have to be reconciled with the House version and approved in both chambers before it is sent to Trump’s desk to become law.
Rep. Jeff Van Drew (R-NJ) signaled he would vote against the bill if it included the Senate provider tax cut, saying, “It doesn’t make sense to hurt American citizens that need to go to the hospital to benefit foreign energy companies.”
Rural areas also disproportionately rely on Medicaid. Additionally, as it stands, there will be 7.8 million fewer Medicaid enrollees under the House legislation.
Rural hospitals typically operate on narrow profit margins but provide crucial care to rural populations, which in turn have high senior populations. About 66 million people live in rural areas, according to the 2020 census.
Hospitals could lose $321 billion over the next 10 years under the House text and would take on another $63 billion in costs from serving a larger uninsured population, according to an analysis by the Urban Institute and the Robert Wood Johnson Foundation. In 2022, hospitals around the country collected $262 billion from Medicaid.
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These rural hospitals at most risk of closure are in isolated communities. They typically serve as some of the only points of access for rural people to receive any healthcare, and closing them would mean residents would be required to travel long distances for emergency, obstetric, or inpatient care.
“As a result, closure of the hospital would cause a loss of access to many essential healthcare services,” the authors of the report said. “In addition, rural hospital closures threaten the nation’s food supply and energy production, because farms, ranches, mines, drilling sites, wind farms, and solar energy facilities are located primarily in rural areas, and they will not be able to attract and retain workers if health care isn’t available in the community.”
