In anticipation of Medicaid cuts, a national focus on financially protecting rural hospitals might be misguided, a Nov. 17 report said, as it excludes facilities predicted to be hit the hardest: Urban hospitals.
The One Big Beautiful Bill Act is expected to hurt hospital revenue streams. To alleviate financial strain on rural hospitals, the legislation allocates $25 billion to states, which will have discretion on how they distribute the funds, and another $25 billion under the purview of CMS Administrator Mehmet Oz, MD. All 50 states have applied to the Rural Health Transformation Program.
Harvard University’s Healthcare Quality and Outcomes Lab, based in Boston’s T.H. Chan School of Public Health, collaborated with The New York Times to analyze how looming Medicaid cuts could affect urban and rural hospitals.
The analysis categorized 4,412 general acute care hospitals among three factors: those that are safety-net, have a high population of low-income and Medicaid patients, or are financially distressed. About 2% of hospitals, or 109, fit into all three categories. Of those 109, 85% are in urban areas.
“With many urban, safety-net hospitals predicted to be most at risk from the OBBBA, the failure to include these facilities and children’s hospitals is a glaring oversight by federal lawmakers,” the report said.
At the time of the bill’s passing, Bruce Siegel, MD, president and CEO of America’s Essential Hospitals, said Medicaid cuts will burden hospitals with $443.4 billion in uncompensated care costs between 2025 and 2034.
In an Oct. 28 report, the Congressional Budget Office estimated the legislation will reduce federal spending on Medicaid by approximately $900 billion by 2034. The number of Americans without health insurance is projected to increase by 7.5 million within a decade.
More uninsured individuals means more uncompensated care, according to the Harvard-Times analysis. And with 80% of the U.S. population residing in urban areas, hospitals in these communities facing closure due to thinner budgets “may have an equally or even more profound population-level impact than the closure of rural hospitals,” the report said.
Health system executives have told Becker’s the legislation will cause their organizations to lose millions of dollars. Already, hospitals across the country are citing the OBBBA as the reason for layoffs and service reductions.
Read a projected state-by-state breakdown on Medicaid cuts here.
