How a Looming Healthcare Crisis in the Making Could Affect You

We have a healthcare tragedy in the making in our country. A significant reduction in federal Medicaid funding is expected which will potentially impact various states differently. One estimate projects a reduction over 10 years totaling 14% of federal Medicaid spending. This could lead to increased state spending to maintain current levels of coverage or necessitate cuts in services. States that expanded Medicaid under the ACA, particularly those with higher rates of expansion, are expected to be disproportionately affected.  This brings us to the impact on rural hospitals. For those living in rural America, the health care system built over decades to ensure care for all is seriously threatened. Let's look at what we currently know

Estimated Cuts: 

A 10-year reduction of $911 billion in federal Medicaid funding is projected. 

Impact on States: 

The impact will vary by state, but those with Medicaid expansion are likely to face greater challenges due to potential loss of federal matching funds.  Some of the most heavily impacted states include Louisiana, Illinois, Nevada, and Oregon. 

Potential Consequences: 

States may need to increase their own spending, cut benefits, or reduce enrollment.   

Rural Areas: 

Rural hospitals and communities are expected to be particularly impacted by Medicaid cuts, especially in states that expanded Medicaid. 

Specific Examples: 

Louisiana, Illinois, Nevada, and Oregon: These states are projected to experience spending cuts of 19% or more over the 10-year period, according to KFF.

Expansion States: States like Kentucky, North Carolina, Virginia, and New York could see significant reductions in rural Medicaid spending, according to the National Rural Health Association. 

Non-Expansion States: States that did not expand Medicaid under the ACA, like Texas, may also experience cuts, but the impact may differ due to variations in eligibility and enrollment. 

Rural hospitals:

Rural hospitals in the US are facing significant financial challenges as many are projected to lose substantial revenue and potentially face closure. A key driver of these losses is the reduction in Medicaid funding, which is a major source of revenue for these hospitals. Cuts in Medicaid reimbursement, including both federal and state funds, could lead to billions of dollars in lost revenue for rural hospitals over the next decade. This could accelerate closure for those already facing financial struggle.

Key Factors Contributing to Losses: 

Medicaid Cuts: Federal Medicaid cuts, particularly those related to the One Big Beautiful Bill Act, are expected to significantly impact rural hospital revenue. According to a report from the National Rural Health Association, these cuts could lead to billions of dollars in lost revenue, impacting hospitals' ability to provide services and potentially leading to closures. 

Uncompensated Care: Increased uncompensated care costs, due to a rise in the number of uninsured individuals, are also contributing to revenue losses for rural hospitals. 

Lower Patient Volume: Rural hospitals often face lower patient volumes due to declining rural populations and patients seeking care at urban facilities. 

High Operating Costs: Delivering healthcare in rural areas can be more expensive due to the need to maintain facilities in remote locations and higher transportation costs. 

Limited Other Revenue Sources: Many rural hospitals rely on local tax revenues or government grants to offset losses, but these sources may not be sufficient to cover rising costs or compensate for Medicaid cuts. 

Closing Facilities:

Since 2005, 195 rural hospitals have closed nationwide, with an additional 742 at risk of closure.  

Sheps Center for Health Services Research at the University of North Carolina has an interactive map showing 87 rural hospitals that have closed completely since 2010 and an additional 65 that "no longer provide in-patient services but continue to provide some health care services." 

Consequences of Losses and Potential Closures: 

Reduced Access to Care: 

Closures or service reductions in rural hospitals can force patients to travel farther for care. This potentially impacts access to emergency services, specialty care, and other essential healthcare services. 

Economic Impact: 

Hospitals are often major employers in rural communities, so closures can lead to job losses and economic hardship. 

Increased Travel Distance: 

Patients may have to travel longer distances for care, potentially increasing costs and delaying treatment, particularly in emergencies. 

Reduced Competition: 

Closure of a local hospital can reduce competition among providers. This  potentially leads to higher prices and reduced quality of care. 

Specific Examples: 

Manatt Health: 

Manatt Health projects rural hospitals to lose 21 cents out of every dollar they receive in Medicaid funding due to the One Big Beautiful Bill Act, according to the National Rural Health Association.  Independent rural hospitals could lose an estimated $465 million in total patient revenue in 2026 due to federal Medicaid cuts, according to InsuranceNewsNet. 

55 additional independent rural hospitals across 26 states could experience negative net incomes due to cuts, putting them at serious risk of closure. 

According to HealthCare Quality & Payment Reform, we as a nation are at risk for over 700 rural hospitals across America closing.  This is a tragedy of major proportions!   

If you are an agency in a state affected by these changes to funding, call Kenyon HomeCare Consulting at 206-721-5091 or email gkenyon@kenyonhcc.com and lets talk about what you can do to care for your clients or patients.