NEW REPORT: Big, Bad Budget Betrayal Would Bring Rural Hospitals to the Brink of Closure - Families USA Skip to Main Content
06.23.2025 / Press Release

NEW REPORT: Big, Bad Budget Betrayal Would Bring Rural Hospitals to the Brink of Closure

Cuts to Medicaid would push dozens more independent rural hospitals into the red, leaving nearly 400 independent rural hospitals across 26 states at serious risk of closure as the tip of the iceberg

WASHINGTON, D.C. – Families USA today released a new report detailing how federal Medicaid cuts included in the current budget reconciliation bill would impact hospital revenues and drive independent rural hospitals to the brink of closure. The results of this analysis show that just two of the many proposed cuts to federal Medicaid funding — added bureaucratic burdens from national work reporting requirements and overly frequent eligibility checks­ — would directly harm the more than 700 independent rural hospitals delivering lifesaving care across the country, putting them at significantly greater risk of closure or acquisition by large corporate systems.

“Many rural independent hospitals are already facing tough times, many with negative net revenue, and this bill would push many more into the red. These proposed Medicaid cuts and coverage terminations could be the final blow for many independent rural hospitals across America. Medicaid is often the biggest line item in these rural hospitals’ budgets, and reducing those paying patients and increasing uncompensated care, on top of direct cuts, would be devastating,” said Anthony Wright, executive director of Families USA. “A rural hospital fund might be a good idea on its own, but not as a band-aid to cover the gaping wound this budget bill would create, with the biggest cut in history to Medicaid. Since Medicaid is also the primary payer for maternity wards, nursing homes, and so much of the health system we all rely on, these massive Medicaid cuts will be felt by all facing scaled-back services and outright closures of key health providers — especially in rural parts of the country. This bill betrays not just the rural Americans who voted for lower costs, but all Americans who need access to quality, affordable health care.”

Families USA’s findings are consistent with the broader evidence base showing cuts to Medicaid in HR 1: One Big Beautiful Bill Act severely threaten the financial viability of rural health care providers, including independent rural providers, across the nation and will further exacerbate hospital consolidation in rural communities. Key findings include:

  • Independent rural hospitals could lose an estimated $465 million in total patient revenue in 2026 due to federal Medicaid cuts — an average loss of $630,665 per hospital.
  • Independent rural hospitals could lose, on average, 56% of their yearly net income due to these revenue losses.
  • As a result of these Medicaid cuts, 55 additional independent rural hospitals (a 17% increase) could experience negative net incomes in 2026 across 26 states, leaving a total of 380 independent rural hospitals nationwide at serious risk of closure.
    • Among those 55 additional hospitals newly at risk of closure, five are in Ohio, four are in Missouri, two are in Iowa, two are in North Carolina, two are in Maine, and one is in West Virginia.

Families USA, the longtime health consumer advocate, is organizing with groups across the nation to protect Medicaid from severe cuts that will result in millions of Americans losing access to the health care they need. Earlier this year, Families USA led hundreds of organizations in calling on Congress and the Trump administration to reject cuts to Medicaid and work to make health care more affordable, not less.

For additional resources, see Families USA’s fact sheets on how work reporting requirements would undermine access to Medicaid, how cuts harm families and communities, and the overall importance of Medicaid to people, the economy and the health care system.