The Critical Lifeline - How Medicaid Sustains Rural Hospitals and Communities
Rural hospitals across America face a precarious financial situation, with nearly half operating in the red and hundreds vulnerable to closure. According to a comprehensive new report from the Chartis Center for Rural Health titled "Medicaid cuts would push rural hospitals—and care for rural communities—over the edge (link at bottom)," potential Medicaid cuts could devastate these vital healthcare institutions and the communities they serve.
The Chartis report, released in May 2025, provides alarming data about the current state of rural healthcare in America. An estimated 10.1 million people rely on Medicaid in rural hospital communities across the country. These individuals depend on their local hospitals for essential services, yet these same hospitals are increasingly operating on what Chartis describes as "the razor's edge" of financial sustainability.
Even without Medicaid cuts, rural healthcare's capacity is already tenuous. The Chartis analysis shows that nearly 50% of rural hospitals are operating in the red, 432 are vulnerable to closure, and many are discontinuing services just to keep their doors open. Recent budget reconciliation efforts on Capitol Hill have pushed potential Medicaid cuts into the spotlight, with the House Committee on Energy and Commerce tasked with finding $880 billion in savings over 10 years.
As operators of a hospital in Nebraska, we're particularly concerned about how these potential cuts would affect our state. According to the Chartis data, Nebraska has 70 rural hospitals, of which 3 have already closed and 15 (21%) are currently vulnerable to closure. The median operating margin for Nebraska rural hospitals is just 2.1%, with 38% operating with negative margins. Nearly 99,000 Nebraskans in rural communities rely on Medicaid for their healthcare.
The financial impact of potential cuts would be substantial. Chartis reports that at the median, Medicaid represents $3.9 million to a rural hospital's bottom line—more than 9% of total hospital net revenue nationally. For Nebraska rural hospitals, Medicaid accounts for about 6% of net revenue, with the median hospital receiving $1.7 million in Medicaid funding.
If proposed cuts to Medicaid were to be implemented, Chartis calculates that a 15% reduction in Medicaid revenue would cause Nebraska rural hospitals to lose more than $31.7 million collectively. This loss would be equivalent to approximately 333 full-time hospital employee salaries in our state alone.
The consequences extend beyond financial numbers. Chartis notes that nearly 50% of rural births across America are currently covered by Medicaid. However, Medicaid reimburses only about 50% of what private insurance carriers pay for childbirth-related services. This financial reality has already contributed to the closure of obstetrics services in many rural communities.
Between 2011 and 2023, Chartis reports that nearly 300 rural hospitals nationwide stopped offering obstetric services. Without local access to obstetrics care, expecting mothers must travel greater distances for prenatal care, labor, and delivery—invariably increasing the risk to both mother and baby. With the U.S. maternal mortality rate already one of the highest among wealthy nations (19 deaths for every 100,000 live births according to recent data cited by Chartis), further restricting access to care would likely worsen this crisis.
The ramifications of Medicaid cuts extend far beyond hospital balance sheets. Rural hospitals are often among the largest employers in their communities. For Nebraska, the potential job losses from Medicaid cuts would have an estimated GDP impact of over $30 million, according to Chartis calculations.
As a rural hospital operator in Nebraska, we see firsthand how Medicaid serves as a crucial lifeline not just for our patients, but for our ability to maintain services and keep our doors open. Chartis data consistently shows that states that expanded Medicaid under the Affordable Care Act have fared better than peers in non-expansion states, with fewer rural hospitals operating in the red and fewer closures.
The data presented by Chartis is clear: Medicaid is essential to the survival of rural hospitals and the health of rural communities. As policymakers debate budget priorities, it's crucial that they understand the outsized impact that Medicaid cuts would have on rural America. The health of millions of Americans—and the economic vitality of countless rural communities—hangs in the balance.