Medicaid Cuts Put More Pressure on 700 Rural Hospitals Already at Risk

US employers are preparing for another significant increase in healthcare costs, while changes to Medicaid under President Donald Trump's 2025 budget reconciliation law are expected to put additional financial pressure on healthcare providers.

More than 700 rural hospitals are already considered at risk of closure, with Medicaid cuts potentially adding further financial pressure.

The law, H.R. 1, known as the One Big Beautiful Bill Act, includes major changes to Medicaid eligibility and financing.

The Congressional Budget Office estimates that the legislation will reduce federal Medicaid spending by about $911 billion over 10 years and increase the number of uninsured Americans by 10 million by 2034.

The effects could be particularly significant for rural hospitals, many of which are already experiencing serious financial difficulties.

The Center for Healthcare Quality and Payment Reform says about 700 rural hospitals—roughly one-third of all rural hospitals in the United States—are at risk of closing.

Its July 2026 data identified 700 hospitals at risk, including 264 at particularly high risk, while more than 100 rural hospitals had already closed and 53 had eliminated inpatient services to qualify as Rural Emergency Hospitals.

The financial difficulties facing these hospitals predate the latest Medicaid changes.

Rural hospitals face problems including low patient volumes, inadequate reimbursement, staffing shortages, rising costs and limited financial reserves.

Medicaid reductions could add to those pressures by reducing insurance coverage and increasing the amount of uncompensated care that hospitals must absorb.

Research from the Commonwealth Fund has similarly warned that reductions in Medicaid coverage could weaken rural hospital finances and accelerate closures among hospitals already operating with limited margins.

The consequences could extend beyond hospital closures. Rural hospitals may respond to financial pressures by eliminating less profitable services, reducing staff, converting to outpatient-only facilities or seeking acquisition by larger healthcare systems.

However, it would be inaccurate to say that the Medicaid cuts will bankrupt 700 rural hospitals.

The 700 figure represents hospitals already identified as being at risk of closure, not 700 hospitals projected to become insolvent because of H.R. 1.

The CBO's 10 million figure also does not mean that 10 million people will immediately lose Medicaid. It refers to the estimated increase in the number of uninsured Americans by 2034 relative to the agency's baseline.

The changes nonetheless represent an additional challenge for a rural healthcare system already facing significant financial strain.