Medicaid cuts imposed by the federal budget reconciliation package, commonly known as the One Big Beautiful Bill Act, could lead to the closure of more than 400 hospitals, reduction of medical services, or layoffs, according to an analysis from the nonprofit consumer advocacy organization, Public Citizen.
A new report from Public Citizen reveals that as many as 450 hospitals are at a high risk of closing or reducing services due to more than $90 billion in cuts to Medicaid and the Children’s Health Insurance Program (CHIP) that are part of the One Big Beautiful Bill Act.
The analysis considers short-term (general and specialty) hospitals and critical access hospitals at financial risk of closing due to severe Medicaid cuts if they have both of these factors:
- Medicaid, SCHIP, and low-income government program payer mix is 20 percent or greater of a hospital’s payer mix on average, from 2022 through 2024.
and
- The hospital has negative net profit margins, on average, for 2022-2024.
Public Citizen relied on hospital financial data for 2022 through 2024, the most recent available from the Centers for Medicare & Medicaid Services, for the report.
The Medicaid cuts will deepen the financial strain already plaguing rural and safety-net hospitals and compromise their ability to deliver care, potentially leading many to close, said Eileen O’Grady, a researcher for Public Citizen and author of the report, in a study announcement. “Congress should take urgent action to restore all Medicaid funding cuts,” O’Grady said, “and should extend the enhanced premium tax credits for coverage through the Affordable Care Act marketplaces.”
Among the key findings of the report:
- 446 hospitals are at heightened risk of closing or reducing services due to Medicaid cuts.
- Collectively, these hospitals have approximately 69,000 beds and served approximately 6.6 million patients in 2024. They employ approximately 275,000 direct patient care workers.
- The communities served by these hospitals have a larger share of Black and Hispanic residents, as well as people living below the poverty line, compared to other hospitals. Nearly 20 percent of the at-risk hospitals (85) serve high-poverty areas.
- Sixty percent or 267 of the at-risk hospitals serve urban areas, and 39 percent or 176 are rural hospitals.
- Five states now have over a quarter of all their hospitals at risk: Connecticut, California, New York, Massachusetts, and Washington.
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In recent months, hospitals have initiated layoffs and reduced services like obstetrics and maternal care, citing financial strain imposed by Medicaid cuts.