National Nurses United, the largest U.S. registered nurses union, released a report July 6 warning that 602 financially vulnerable hospitals could see their combined deficit grow by 50% to 75% under the combined weight of Medicare sequestration, Medicaid cuts tied to HR 1 and the expiration of enhanced ACA marketplace subsidies.
The report, “A Preventable Crisis,” was produced by NNU, a labor union representing more than 225,000 registered nurses that has publicly opposed the Medicaid and ACA provisions of HR 1. Its findings and policy recommendations reflect that advocacy position; the underlying financial data are drawn from CMS Medicare Cost Reports.
Eight things to know:
1. The analysis is built on a Financial Vulnerability Index. NNU screened 3,911 hospitals using five years of Medicare Cost Report data through Dec. 31, 2025, scoring each on net income and net worth trends. The 602 hospitals scoring -7 to -10 (out of a possible -10 to 0) were classified as financially vulnerable.
2. Those 602 hospitals already carry a combined $10.16 billion deficit. NNU said that the hospitals’ deficit predates any of the three federal revenue changes examined in the report.
3. NNU projects the combined cuts would add $5.21 billion to $7.72 billion to the existing deficit in a single year once the provisions are fully phased in. That would bring the total projected shortfall across the 602 hospitals to between $15.37 billion and $17.88 billion. The range reflects two Medicaid scenarios — a 10% cut (lower bound) and an 18% cut (upper bound) — drawn from outside projections of HR 1’s impact rather than a fixed statutory figure; the Medicare sequestration (2%) and ACA subsidy-expiration impacts used in the model are held constant across both scenarios.
4. Losses would be concentrated but still widespread. The median projected loss per hospital is $3.4 million to $4.7 million, while a small number of larger hospitals face losses as high as $180 million to $316 million, according to the report.
5. The cuts could reverse recent financial recovery. NNU found 96 of the 602 hospitals had posted positive net income in their most recent reporting year. Under the report’s scenarios, that number would fall to 37 or 23, meaning 59 to 73 hospitals could be pushed back into the red.
6. The hospitals span 47 states. California (67), New York (40), Texas (35), Oklahoma (27), and Kansas and Alabama (23 each) have the largest concentrations, according to the report.
7. A majority of the vulnerable hospitals are in metro areas, not rural ones. NNU found 61% (366 hospitals) are in metropolitan areas, versus about 21% rural and 18% micropolitan — a split the report says challenges the assumption that hospital financial distress is mainly a rural issue. The cohort includes 131 critical access hospitals and 469 short-term acute care hospitals.
8. The report calls for Congress to cancel the three cuts and create a new reimbursement program. Its main recommendations are reversing the Medicare sequestration, HR 1 Medicaid reductions and ACA subsidy expiration; establishing a tiered “Financial Vulnerability Program” that would reimburse the most distressed hospitals at 101% of costs, modeled on the Critical Access Hospital program; and having CMS publish an annual, updated Financial Vulnerability Index.
Read the full report here.
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