Rural Hospitals Face Existential Threat from Senate Medicaid Overhaul

Rural hospitals across the United States are bracing for potentially devastating cuts under Medicaid changes being crafted by the Senate Finance Committee, with healthcare leaders warning that the proposed legislation could lead to the closure of critical access hospitals that serve as lifelines for small communities nationwide. The Senate is expected to release its version of the reconciliation bill as early as this week, with discussions centering on deeper cuts to Medicaid funding than those passed by the House. For the nation's approximately 1,350 critical access hospitals and small rural facilities, the changes represent an existential threat to their operations, which are already strained by workforce shortages and post-pandemic financial pressures.

More than 180 rural hospitals have closed since 2005, and healthcare advocates warn that the proposed Senate changes could accelerate that trend dramatically. Rural hospitals operate on razor-thin margins, with many serving communities where Medicaid beneficiaries comprise 40 to 60 percent of their patient base. The proposed Senate changes include several provisions that would hit rural hospitals especially hard, including significant cuts to enhanced federal matching rates for Medicaid expansion states, which would eliminate billions in federal funding that helps offset the chronic underpayment rural hospitals receive for Medicaid services.