Rural Hospitals at Risk: Cuts to Medicaid Would Further Threaten Access

Medicaid, which covers over 16 million people in rural communities, helps address barriers to health care and sustain rural hospitals. But many in Congress are considering Medicaid cuts that would have a devastating impact on rural hospitals and patients.

The One Big Beautiful Bill Act (H.R. 1) would result in 1.8 million individuals in rural communities losing their Medicaid coverage by 2034. In addition, select Medicaid provisions in H.R. 1 would result in a $50.4 billion reduction in federal Medicaid spending on rural hospitals over 10 years.¹ See the chart on the next page for a state-by-state breakdown of rural spending and coverage losses.

Rural Hospitals Are Already Struggling:

• 48% of rural hospitals operated at a financial loss in 2023.²
• 92 rural hospitals have closed their doors or been unable to continue providing inpatient services over the past 10 years.³
• Rural hospitals lose money on several critical service lines, including behavioral health, pulmonology, obstetrics, and burns and wounds.⁴

Medicaid is Critical to Rural Hospitals:

• 16.1 million people living in rural communities are covered by Medicaid.⁵
• In nine states, over 50% of the Medicaid population lives in rural communities: Montana, South Dakota, Wyoming, Mississippi, Vermont, Kentucky, North Dakota, Alaska and Maine.⁶
• 47% of rural births in the U.S. are covered by Medicaid.⁷
• 65% of nursing home residents in rural counties are covered by Medicaid.⁸

Medicaid Already Pays Rural Hospitals Far Less Than the Cost of Care:

• Medicaid paid rural hospitals approximately 63 cents on the dollar for inpatient obstetrics care in 2024.⁹
  • There has been a 16% decline in rural counties with hospital-based obstetric care services over the last decade.¹⁰
• Similarly, Medicaid payments covered approximately just 70% of costs for behavioral health services in hospital settings, which include substance use disorder treatment.¹¹

Source: Modeling of select H.R. 1 Medicaid provisions conducted by Manatt Health Strategies, LLC. This analysis accounts for the following H.R. 1 Medicaid provisions: (1) mandatory community engagement (work) requirements, (2) increasing frequency of eligibility redeterminations for certain individuals, (3) ban on new or increased provider taxes, (4) revising the payment limit for state directed payments (SDPs), (5) reduction in the expansion FMAP in states providing coverage to certain undocumented immigrants and (6) the repeal of rules relating to eligibility and enrollment in Medicaid, CHIP, the Medicare Savings Programs (MSPs) and the Basic Health Program (BHP).

Notes: State values will not sum to national totals due to rounding. Rural Medicaid coverage losses are based on the geographical distribution of Medicaid enrollees. Rural hospital impacts are based on the geographical distribution of Medicaid hospital expenditures.

End Notes

1. Modeling of select H.R. 1 Medicaid provisions conducted by Manatt Health Strategies, LLC. This analysis accounts for the following H.R. 1 Medicaid provisions: (1) mandatory community engagement (work) requirements, (2) increasing frequency of eligibility redeterminations for certain individuals, (3) ban on new or increased provider taxes, (4) revising the payment limit for state directed payments (SDPs), (5) reduction in the expansion FMAP in states providing coverage to certain undocumented immigrants and (6) the repeal of rules relating to eligibility and enrollment in Medicaid, CHIP, the Medicare Savings Programs (MSPs) and the Basic Health Program (BHP).
2. AHA analysis of RAND Hospital Cost Report data.
3. AHA analysis of data from Cecil G. Sheps Center for Health Services Research.
4. AHA analysis of industry benchmark data from Strata Decision Technology LLC.
5. Kaiser Family Foundation (KFF).
6. KFF.
7. AHA analysis of data from CDC Wonder.
8. Rural Policy Research Institute.
9. AHA analysis of industry benchmark data from Strata Decision Technology LLC.
10. University of Minnesota Rural Health Research Center.
11. AHA analysis of industry benchmark data from Strata Decision Technology LLC.