New report finds Medicaid cuts threaten hundreds of hospitals

More than 400 hospitals across the country are at high risk of closing or cutting services because of Medicaid cuts in President Donald Trump’s “Big and Beautiful Bill,” according to an analysis by the progressive watchdog group Public Citizen.

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The impact could make it harder for millions of people to receive care and jeopardize the jobs of thousands of health care workers as hospitals lose critical federal funding. Medicaid covers about one-fifth of all hospital spending.

Medicaid cuts would be phased in, with more significant changes such as work requirements in 2027, and restrictions on how states are funded in 2028. Overall, the legislation is expected to reduce federal Medicaid funding by about $1 trillion over the next 10 years.

“We are seeing hospitals, already under severe financial strain, being forced to make decisions about how to stay financially afloat,” said Eileen O’Grady, a research fellow at Public Citizen Congress Watch and an author of the report. “This has obvious implications for people who live in the area, and it also has a ripple effect on other hospitals in the area.”

The analysis is based on hospital financial data from the Centers for Medicare and Medicaid Services from 2022 to 2024, covering approximately 95% of U.S. hospitals. The group defined at-risk hospitals as those that have been operating at a loss in recent years, with Medicaid and other low-income government programs accounting for at least 20% of their revenue.

The report does not predict when hospitals may close or cease services.

“While closure is the worst-case scenario, it does not prevent hospitals from having to make very difficult decisions to cut services that may be essential to their communities but are no longer financially viable,” O’Grady said.

Hospitals across the country have already issued statements warning that they may have to lay off staff or cut back on services, including obstetrics and mental health care, because of Medicaid cuts.

For many patients, the hospital is the last resort when there are few or no other treatment options.

“When hospitals close, patients don’t get the care they need,” said Gideon Lukens, director of research and data analysis on the health policy team at the Center on Budget and Policy Priorities, a nonpartisan research group. “They have to travel further or wait longer in other busy hospitals. That additional time can mean the difference between success and failure for time-sensitive, potentially life-saving treatments.”

Closures also increase the burden on hospitals to accept additional patients. O’Grady said doctors ultimately have “less patience, time and ability to provide the highest quality care.”

“It’s very dangerous for hospitals to be under this kind of strain,” she says.

The analysis found a total of 446 at-risk hospitals, with at least one at-risk hospital in 44 states and Washington, DC.

Although much of the discussion about Medicaid cuts focuses on rural hospitals, approximately 60% (267 facilities) of hospitals at risk are in urban areas. Black and Latino people will be most affected by the cuts.

The hospitals are spread across both Democratic and Republican-led states, but the states with the highest number of hospitals at risk are California, New York, Illinois, and Washington.

Republicans also represent some of the congressional districts with the highest number of at-risk hospitals. House Republicans who voted for Medicaid cuts have 196 at-risk hospitals in their districts, while Senate Republicans who all supported cuts represent 146 at-risk hospitals in the state, according to the analysis.

Zachary Levinson, project director of the KFF Project on Hospital Costs, said the cuts could worsen the crisis, especially for rural hospitals.

He estimates that while President Trump’s law sets aside $50 billion to help rural areas, federal Medicaid spending in rural areas could be cut by much more, by about $137 billion over 10 years.

James Jackson, CEO of Alameda Health System in Oakland, Calif., called Medicaid cuts an “existential threat.”

Alameda Health System, which derives 60% of its revenue from Medicaid payments, announced in December that it would lay off nearly 300 employees and lose more than $100 million a year by 2030. (The health network was not on Public Citizen’s at-risk list, but the report notes financial troubles.)

The job cuts, which were due to take effect in March, have since been postponed.

Proposed cuts included mental health services, care for chronically ill patients and outpatient plastic surgery programs. Jackson said hospital closures are not on the table, but the system continues to consider reducing services.

“I don’t think the impact will be positive,” he said. “We are often the provider of last resort, so if we are unable to provide services, there may be delays in receiving care in other systems in the community, or services may not be provided at all.”

Trinity Health, a Michigan-based hospital system with facilities in other states, said it expects to lose $1.5 billion due to “recent and future government policy changes.”

In January, the company announced it would lay off 10.5% of its billing staff. One of the hospitals, St. Mary’s Sacred Heart Hospital in rural northeast Georgia, announced last October that it would close its obstetrics department.

In a statement, a Trinity Health spokesperson shared an earlier statement that said in part that the federal government was considering “further cuts” and that “it is not possible to simply absorb such a significant financial impact without making thoughtful, positive changes.”