Rural hospitals brace for financial hits or even closure under
Republicans' $1 trillion Medicaid cut
[July 05, 2025]
By MARGERY A. BECK and SUSAN HAIGH
OMAHA, Neb. (AP) — Tyler Sherman, a nurse at a rural Nebraska hospital,
is used to the area's aging farmers delaying care until they end up in
his emergency room.
Now, with Congress planning around $1 trillion in Medicaid cuts over 10
years, he fears those farmers and the more than 3,000 residents of
Webster County could lose not just the ER, but also the clinic and
nursing home tied to the hospital.
“Our budget is pretty heavily reliant on the Medicaid reimbursement, so
if we do see a cut of that, it’ll be difficult to keep the doors open,”
said Sherman, who works at Webster County Community Hospital in the
small Nebraska town of Red Cloud just north of the Kansas border.
If those facilities close, many locals would see their five-minute trip
to Webster County hospital turn into a nearly hour-long ride to the
nearest hospital offering the same services.
“That's a long way for an emergency,” Sherman said. “Some won't make
it.”
Already struggling hospitals would be hit particularly hard
States and rural health advocacy groups warn that cutting Medicaid — a
program serving millions of low-income and disabled Americans — would
hit already fragile rural hospitals hard and could force hundreds to
close, stranding some people in remote areas without nearby emergency
care.
More than 300 hospitals could be at risk for closure under the
Republican bill, according to an analysis by the Cecil G. Sheps Center
at the University of North Carolina at Chapel Hill, which tracks rural
hospital closures. Even as Congress haggled over the controversial bill,
a health clinic in the southwest Nebraska town of Curtis announced
Wednesday it will close in the coming months, in part blaming the
anticipated Medicaid cuts.
Bruce Shay, of Pomfret, Connecticut, fears he and his wife could be
among those left in the lurch. At 70, they're both in good health, he
said. But that likely means that if either needs to go to a hospital,
“it's going to be an emergency.”
Day Kimball Hospital is nearby in Putnam, but it has faced recent
financial challenges. Day Kimball's CEO R. Kyle Kramer acknowledged that
a Senate bill passed Tuesday — estimated to cut federal Medicaid
spending in rural areas by $155 billion over 10 years — would further
hurt his rural hospital's bottom line. Roughly 30% of Day Kimball’s
current patients receive Medicaid benefits, a figure that’s even higher
for specific, critical services like obstetrics and behavioral health.
“An emergency means I’m 45 minutes to an hour away from the nearest
hospital, and that’s a problem," Shay said. And he and his wife wouldn't
be the only ones having to make that trip.
“You’ve got, I’m sure, thousands of people who rely on Day Kimball
Hospital. If it closed, thousands of people would have to go to another
hospital,” he said. “That’s a huge load to suddenly impose on a hospital
system that’s probably already stretched thin.”
Experts say the bill's $50 billion fund for rural hospitals isn't
enough
Rural hospitals have long operated on the financial edge, especially in
recent years as Medicaid payments have continuously fallen below the
actual cost to provide health care. More than 20% of Americans live in
rural areas, where Medicaid covers 1 in 4 adults, according to the
nonprofit KFF, which studies health care issues.
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This photo provided by Tyler Sherman shows Webster County Community
Hospital in Red Cloud, Neb., on July 3, 2025. (Tyler Sherman via AP)
President Donald Trump’s $4.5 trillion tax breaks and spending cuts
bill, which passed Thursday, would worsen rural hospitals' struggles by
cutting a key federal program that helps states fund Medicaid payments
to health care providers. To help offset the lost tax revenue, the
package includes $1.2 trillion in cuts to Medicaid and other social
safety net programs — cuts they insist only root out fraud and waste in
the system.
But public outcry over Medicaid cuts led Republicans to include a
provision that will provide $10 billion annually to buttress rural
hospitals over the next five years, or $50 billion in total. Many rural
hospital advocates are wary that it won't be enough to cover the
shortfall.
Carrie Cochran-McClain, chief policy officer with the National Rural
Health Association, said rural hospitals already struggle to break even,
citing a recent American Hospital Association report that found that
hospitals in 2023 got nearly $28 billion less from Medicaid than the
actual cost of treating Medicaid patients.
“We see rural hospitals throughout the country really operating on
either negative or very small operating margins," Cochran-McClain said.
"Meaning that any amount of cut to a payer — especially a payer like
Medicaid that makes up a significant portion of rural provider funding —
is going to be consequential to the rural hospitals' ability to provide
certain services or maybe even keep their doors open at the end of the
day.”
Kentucky is expected to be hit especially hard
A KFF report shows 36 states losing $1 billion or more over 10 years in
Medicaid funding for rural areas under the Republican bill, even with
the $50 billion rural fund. No state stands to lose more than Kentucky.
The report estimates the Bluegrass State would lose a whopping $12.3
billion — nearly $5 billion more than the next state on the list. That's
because the bill ends Kentucky's unique Medicaid reimbursement system
and reduces it to Medicare reimbursement levels.
Kentucky currently has one of the lowest Medicare reimbursement rates in
the country. It also has one of the highest poverty rates, leading to a
third of its population being covered by Medicaid.
Kentucky Gov. Andy Beshear, a two-term Democrat widely seen as a
potential candidate for president in 2028, said the bill would close 35
hospitals in his state and pull health care coverage for 200,000
residents.
“Half of Kentucky’s kids are covered under Medicaid. They lose their
coverage and you are scrambling over that next prescription,” Beshear
said during an appearance on MSNBC. “This is going to impact the life of
every single American negatively. It is going to hammer our economy."
___
Haigh reported from Hartford, Connecticut.
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