{"id":110524,"date":"2025-03-14T14:50:59","date_gmt":"2025-03-14T22:50:59","guid":{"rendered":"https:\/\/xira.com\/p\/2025\/03\/14\/the-hidden-cost-of-medicaid-cuts-why-the-gops-budget-plan-would-be-a-disaster-for-hospitals\/"},"modified":"2025-03-14T14:50:59","modified_gmt":"2025-03-14T22:50:59","slug":"the-hidden-cost-of-medicaid-cuts-why-the-gops-budget-plan-would-be-a-disaster-for-hospitals","status":"publish","type":"post","link":"https:\/\/xira.com\/p\/2025\/03\/14\/the-hidden-cost-of-medicaid-cuts-why-the-gops-budget-plan-would-be-a-disaster-for-hospitals\/","title":{"rendered":"The Hidden Cost Of Medicaid Cuts: Why The GOP\u2019s Budget Plan Would Be A Disaster For Hospitals"},"content":{"rendered":"

The post The Hidden Cost Of Medicaid Cuts: Why The GOP\u2019s Budget Plan Would Be A Disaster For Hospitals<\/a> appeared first on Above the Law<\/a>.<\/p>\n

As Congress deliberates what the future of Medicaid funding will look like, healthcare executives are worried.<\/p>\n

House Republicans proposed Medicaid cuts<\/a> last month that would have sweeping and disproportionate consequences \u2014 particularly for rural hospitals and underserved populations. The plan, which seeks to reduce Medicaid spending by hundreds of billions of dollars over the next decade, lacks specifics but could be implemented through reduced federal funding, block grants or stricter eligibility requirements. Healthcare leaders warn that these cuts would cause uncompensated care costs to balloon, leading to hospital closures and diminished care access.<\/p>\n

The experts interviewed for this article agreed that while the proposed Medicaid cuts aim to reduce government spending, the plan will actually end up exacerbating the financial instability of the overall U.S. healthcare system \u2014 as well worsen health outcomes for millions of Americans.<\/p>\n

House Republicans introduced<\/a> a budget plan last month ordering various congressional committees to find at least $1.5 trillion in spending cuts over the next 10 years. It directs the Energy and Commerce Committee, which oversees Medicare and Medicaid, to reduce its spending by $880 billion over that time period.<\/p>\n

The GOP\u2019s budget blueprint doesn\u2019t outline how the committee would achieve this target, but it\u2019s clear that doing so would involve significant cuts to Medicaid. The nation\u2019s Medicaid program, which provides health coverage for about 72 million Americans, accounts for one-sixth<\/a> of all healthcare expenditures and is one of the largest programs under the Energy and Commerce Committee\u2019s jurisdiction.<\/p>\n

The day the plan was released, one federal budget expert \u2014 Bobby Kogan, senior director of Federal Budget Policy at Center for American Progress<\/a> and former adviser to the director of the Office of Management and Budget under the previous presidential administration \u2014 wrote on X<\/a> that this plan would undoubtedly require major cuts to Medicaid.<\/p>\n

\u201cFor Energy and Commerce, it\u2019s mathematically impossible to achieve $880 billion in savings if you don\u2019t cut Medicaid or Medicare. There\u2019s not enough money they have jurisdiction over. Republicans say they\u2019re not cutting Medicare, so that means they\u2019re cutting Medicaid,\u201d he wrote.<\/p>\n

A March 5 report<\/a> from the Congressional Budget Office also found it is impossible to achieve $880 billion in savings without broad cuts to Medicaid.<\/p>\n

The House passed<\/a> the budget resolution on February 25, and the Senate is expected to vote on the plan this month.\u00a0<\/p>\n

Healthcare leaders certainly don\u2019t have a sunny outlook about the budget resolution making its way through Congress, but it\u2019s presently difficult to quantify exactly how disastrous its effects would be because the plan lacks specifics, said Harold Miller, CEO of the Center for Healthcare Quality and Payment Reform<\/a>.<\/p>\n

There are several ways Congress might go about reducing Medicaid funding, he noted.\u00a0<\/p>\n

For example, lawmakers could lower the federal government\u2019s share of Medicaid funding, which would force states to either cover the difference or slash services. Alternatively, Congress could withdraw federal support for specific services, such as expensive GLP-1 drugs, which would shift financial responsibility to state governments, Miller explained.<\/p>\n

Another tactic Congress may choose is cutting eligibility. With Medicaid eligibility reduced, fewer Americans would be insured, which would cause a surge in hospitals\u2019 uncompensated care, Miller remarked.<\/p>\n

He also mentioned block grants as a possibility. Instead of covering a percentage of costs, the federal government could provide states with a fixed sum for Medicaid \u2014 which would limit funding growth and force states to make tough decisions about whether or not to make their own cuts.<\/p>\n

\u201cMany people have argued that [block grants] could give the state greater flexibility in terms of exactly what it covers and how it structures the program. The concern is, if Congress decides it\u2019s going to cut the overall amount, then the state might not have enough money to be able to provide the same level of benefits,\u201d Miller remarked.<\/p>\n

He pointed out that Medicaid cuts would likely lead to many difficult decisions for state-level leaders. Since Medicaid is a joint state-federal program, states would have to figure out how to respond to federal cuts \u2014 whether to reduce provider payments, get rid of services or maintain coverage by increasing state spending.<\/p>\n

Medicaid cuts would affect many more Americans than just those covered by Medicaid, noted Megan Cundari, senior director of federal relations at American Hospital Association<\/a>. This is because the financial ramifications would force hospitals to make cost-cutting adjustments like eliminating departments or laying off staff members \u2014 thereby affecting all patients.<\/p>\n

Slashing Medicaid funding means hospitals would deliver more uncompensated care. Fewer people would have Medicaid coverage, leading to more uninsured patients unable to pay for their services. A report<\/a> released this week predicted that Medicaid cuts would result in an $80 billion revenue loss for providers next year, due in large part to a spike in uncompensated care costs.<\/p>\n

This would strain providers\u2019 finances, and many hospitals would be forced to eliminate certain service lines or reduce their staffing levels, Cundari pointed out.<\/p>\n

\u201cThere may be, for example, longer wait times at the emergency department because there\u2019s just not as many staff to help serve all the people that need to be served in the community. I think it\u2019s important to understand that the Medicaid cuts are not just Medicaid cuts \u2014 and they will not just impact the people who are involved in the program. They\u2019re also going to impact entire communities,\u201d she declared.<\/p>\n

There are hundreds of rural and safety-net facilities across the nation that rely heavily on Medicaid reimbursements to cover the cost of care \u2014 and for some of these organizations, a significant decline in Medicaid payments will be the straw that breaks the camel\u2019s back, forcing them to close their doors, added Ben Finder, the AHA\u2019s vice president of policy, research, analytics and strategy.<\/p>\n

When a rural or safety-net hospital closes, its patients don\u2019t just disappear, he noted. These patients must seek care at the next nearest facility, which is often a regional hospital that is already operating at capacity.\u00a0<\/p>\n

This surge in patient volume can overwhelm staff and decrease provider availability, further diminishing care quality and access for all patients in the area, Finder explained.<\/p>\n

Medicaid cuts would hit rural hospitals,those who can least afford it, the hardest. For one, most of these hospitals operate on razor-thin margins \u2014 research<\/a> from last month shows nearly half of the country\u2019s rural hospitals are operating at a loss.<\/p>\n

Secondly, many rural Americans receive coverage through the Medicaid program. In rural communities, 18% of adults<\/a> are covered by Medicaid.\u00a0<\/p>\n

In six states \u2014 Arizona, Arkansas, Florida, Louisiana, New Mexico and South Carolina \u2014 more than half of children<\/a> in rural areas are covered by Medicaid or the Children\u2019s Health Insurance Program (CHIP)<\/a>. CHIP provides low-cost health coverage to children whose families earn too much to qualify for Medicaid but can\u2019t afford private insurance. While CHIP is technically a separate program from Medicaid, CHIP is typically managed and administered in conjunction with it.<\/p>\n

Nick Olson, CFO of Sanford Health<\/a>, called Medicaid \u201cthe bedrock\u201d of rural healthcare. Sanford is a South Dakota-based system operating 56 hospitals and more than 270 clinics across several states.\u00a0<\/p>\n

Most of the health system\u2019s patients live in rural communities, Olson said. He also pointed out that more than half of Sanford\u2019s skilled nursing facility residents are covered by Medicaid.<\/p>\n

\u201cHospitals across the country are already struggling to break even, and this really puts pressure on their ability to reinvest back into the communities that they\u2019re serving \u2014 to reinvest back into increasing and expanding access,\u201d Olson declared. \u201cFor us, in 2022 alone, and I believe more recent years are similar, we provided over $159 million in uncompensated care.\u201d<\/p>\n

Reducing Medicaid funding would cause that figure to rise to an even more unsustainable level, Olson said.<\/p>\n

Another healthcare executive \u2014 Alan Morgan, CEO of National Rural Health Association<\/a> \u2014 said there is no question that rural hospitals would close should the government cut Medicaid spending.<\/p>\n

\u201cSomewhere between 400 to 700 rural hospitals<\/a> are at financial risk for closure right now, so any type of reduction in revenue is going to have a dramatic impact on these facilities,\u201d he remarked.<\/p>\n

Rural hospital closures would force many Americans to travel long distances for even basic treatments and emergency care. This would cause many rural residents to forgo routine care, leading to greater utilization of emergency departments \u2014 the most expensive place to get care\u2014 Morgan explained.<\/p>\n

This problem would destroy the purported intent of the budget resolution, which is to save money, argued Effie Carlson, CEO of care coordination company Watershed Health<\/a>.<\/p>\n

In other words, the House Republicans\u2019 plan to cut Medicaid funding aims to save money, but it will likely increase overall healthcare spending. Higher utilization rates in expensive settings like ERs and long-term care facilities will lead to higher costs for taxpayers, Carlson said.<\/p>\n

\u201cIn healthcare, you don\u2019t avoid paying for things \u2014 it just gets paid for somewhere else in a less controllable way,\u201d she declared.<\/p>\n

To paint an even bleaker economic picture, rural hospitals are often the largest employers in their area, which means that if they reduced staffing or closed, unemployment in those regions would increase, Carlson added.<\/p>\n

This would also lead to greater unemployment and reduced tax revenue, thereby pushing rural communities deeper into economic distress, she remarked.<\/p>\n

At first, slashing Medicaid funding may appear to save dollars on paper, but experts agree that the real costs are hidden beneath the surface. When hospitals close and care disappears, expenses don\u2019t just go away \u2014 they get passed to struggling communities and overwhelmed providers.<\/p>\n

Photo: Justin Sullivan, Getty Images<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

The post The Hidden Cost Of Medicaid Cuts: Why The GOP\u2019s Budget Plan Would Be A Disaster For Hospitals appeared first on Above the Law. As Congress deliberates what the future of Medicaid funding will look like, healthcare executives are worried. House Republicans proposed Medicaid cuts last month that would have sweeping and disproportionate consequences […]<\/p>\n","protected":false},"author":3,"featured_media":110525,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[16],"tags":[],"class_list":["post-110524","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-above_the_law"],"jetpack_featured_media_url":"https:\/\/i0.wp.com\/xira.com\/p\/wp-content\/uploads\/2025\/03\/capitol-YdU9zh.jpeg?fit=594%2C396&ssl=1","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/xira.com\/p\/wp-json\/wp\/v2\/posts\/110524","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/xira.com\/p\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/xira.com\/p\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/xira.com\/p\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/xira.com\/p\/wp-json\/wp\/v2\/comments?post=110524"}],"version-history":[{"count":0,"href":"https:\/\/xira.com\/p\/wp-json\/wp\/v2\/posts\/110524\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/xira.com\/p\/wp-json\/wp\/v2\/media\/110525"}],"wp:attachment":[{"href":"https:\/\/xira.com\/p\/wp-json\/wp\/v2\/media?parent=110524"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/xira.com\/p\/wp-json\/wp\/v2\/categories?post=110524"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/xira.com\/p\/wp-json\/wp\/v2\/tags?post=110524"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}