The American healthcare system has spent decades teetering on a financial edge in its most vulnerable corners. In rural communities, in low-income urban neighborhoods, in places where one hospital might be the only lifeline for tens of thousands of people, that edge has always felt dangerously close. But something shifted on July 4, 2025. A single piece of federal legislation set in motion a chain of events that experts, hospital executives, and policy analysts are now describing as one of the most consequential threats to hospital access in the history of the United States.
The hospitals now facing potential closure or severe service reductions aren’t failing institutions. Many have survived decades of financial pressure, staffing shortages, and pandemic chaos. They kept their doors open when others closed. But the funding math has now changed in ways that may be impossible to overcome.
What follows is a full accounting of who is at risk, where those hospitals are, how many patients and workers stand to be affected, and what the policy decisions behind this crisis actually mean for anyone who depends on a hospital being there when they need it.
The Law That Triggered the Crisis
On July 4, 2025, President Trump signed a Republican budget reconciliation package into law. The One Big Beautiful Bill Act – which opponents nicknamed the Big Ugly Law – will cut $911 billion in federal spending on Medicaid and the Children’s Health Insurance Program (CHIP) over the next 10 years, according to estimates from the Congressional Budget Office.
Medicaid is the joint federal-state program that provides health coverage to low-income Americans, including children, seniors, people with disabilities, and working adults who don’t have access to employer-sponsored insurance. More than 80 million people rely on Medicaid, making it the single largest source of health coverage funding for low-income Americans. For hospitals, Medicaid isn’t just one revenue stream among many. It covers about a fifth of all hospital spending, according to KFF Health News.
The cuts are enacted through several mechanisms designed to reduce the number of people enrolled in Medicaid, including new work and community engagement requirements – essentially conditions that certain adults must meet to keep their coverage. All people enrolled in or enrolling in Medicaid for the first time are required to verify their work status every six months, with that provision set to go into effect by January 1, 2027. Specifically, enrollees must document at least 80 hours per month of qualifying activities, which can include employment, participation in a work or training program, enrollment in an educational program, or community service.
Under the law, at least 10 million more people are expected to become uninsured by 2034, with 7.5 million of those losses tied to changing Medicaid policies and around 2.1 million people losing access to coverage through the Affordable Care Act marketplaces.
The impact on hospitals is direct. When patients lose Medicaid coverage, hospitals don’t stop treating them. Under federal law, emergency departments are required to provide care regardless of ability to pay. That means more uncompensated care, higher costs, and less revenue – a math problem that some hospitals simply won’t be able to solve.
A Compounding Layer: DSH Payment Cuts
Alongside the broader Medicaid overhaul, a separate but related blow landed on safety-net hospitals in October 2025. On October 1st, $8 billion reductions in Disproportionate Share Hospital (DSH) payments went into effect, with additional reductions expected totaling $24 billion over several years. DSH payments – meaning “disproportionate share” hospital payments – are federal funds specifically designed to help hospitals that treat unusually high numbers of low-income and uninsured patients. The Medicaid DSH program assists hospitals serving disproportionate numbers of low-income and uninsured patients, and these funds help alleviate both Medicaid underpayment and uncompensated care costs to ensure patients have access to critical services, including trauma care, burn units, maternal care, and high-risk neonatal care, according to the American Hospital Association.
For hospitals already operating at the margin, this combination – the structural Medicaid overhaul plus the DSH cuts – represents a one-two blow that many may not survive.
The 446-Hospital Report: Methodology and Findings
Consumer advocacy group Public Citizen identified 446 hospitals that are at heightened risk due to Medicaid cuts. The organization examined financial data from 2022 through 2024, covering approximately 95% of U.S. acute care hospitals.
To identify at-risk hospitals, Public Citizen screened for facilities where at least 20% of revenue comes from Medicaid and other low-income government programs and that reported negative net profit margins on average from 2022 through 2024. The double-screen was intentional: a hospital that relies heavily on Medicaid but is financially healthy might absorb cuts better. A hospital that is both Medicaid-dependent and already operating at a loss has virtually no cushion.
The list of at-risk hospitals is meant to be descriptive rather than predictive – it does not forecast that these hospitals will close, but rather identifies the hospitals most financially at risk from severe Medicaid cuts.
These 446 at-risk hospitals collectively have 68,986 beds and served approximately 6.6 million patients in 2024, employing approximately 275,458 direct patient care workers – a figure that does not include non-medical workers such as administrative staff.
One limitation of the methodology is worth noting. The report itself acknowledges that some hospitals under genuine financial strain may not appear on the list, while some listed hospitals may prove more resilient than the criteria suggest. Alameda Health System in Oakland, for example, projected losses of more than $100 million annually by 2030 and announced nearly 300 layoffs, yet was not captured by the screen because its three-year average margin was slightly positive despite a negative margin in 2024.
Where the Risk Is Concentrated: A State-by-State Breakdown
The analysis found at least one at-risk hospital in 44 states and Washington, D.C. About 60% of the at-risk hospitals – 267 facilities – are in urban areas, even as much of the political debate around Medicaid cuts has focused on rural hospitals.
The states with the highest number of at-risk hospitals are California (83), New York (45), Illinois (28), and Washington (22). Five states now have over a quarter of all their hospitals at risk: Connecticut, California, New York, Massachusetts, and Washington.
When measured by share of hospitals at risk, Connecticut leads the country at 36%, followed by California and New York at 31% each, Massachusetts at 27%, and Washington at 26%.
The geographic spread challenges the common assumption that this is purely a rural problem. Of the 446 hospitals identified as at risk, 267 were in urban areas and 176 were rural. In places like Los Angeles, the collapse or retrenchment of even one financially vulnerable urban hospital can ripple quickly across surrounding emergency departments, specialty referral networks, and physician practices.
Rural communities, however, have the least margin for error. Public Citizen notes that many of the hospitals on its list have special Medicare designations such as Critical Access Hospital, Sole Community Hospital, and Medicare Dependent Hospital – categories often tied to facilities that are financially vulnerable and serve as a community’s only nearby option for acute care. When one of those hospitals cuts services or shuts down, residents don’t just lose convenience. They lose their only realistic source of care.
Almost half of the at-risk hospitals have special Medicare payment designations typically associated with hospitals that are rural or financially vulnerable, including Critical Access Hospital (19%), Rural Referral Center (16%), Sole Community Hospital (9%), and Medicare Dependent Hospital (4%).
The political geography of this crisis cuts across party lines more than the headlines suggest. House Republicans who voted for Medicaid cuts have 196 at-risk hospitals in their districts, and Senate Republicans – all of whom voted for the cuts – have 146 at-risk hospitals in their states.
Who Bears the Hardest Burden
Nearly 20% of the at-risk hospitals serve areas with high levels of poverty, according to the report. At-risk hospitals have larger percentages of Black and Hispanic residents in their surrounding communities. Those hospitals serve communities where 20% of residents are Hispanic and 13% are Black, compared to 13% Hispanic and 9% Black in communities served by other hospitals.
More than a quarter of hospitals in states like Connecticut, California, New York, Massachusetts, and Washington are at risk of closing or cutting services. Obstetrics care could be hit especially hard, as it’s one of the most expensive categories of service provided by hospitals, and Medicaid funds nearly 40% of all births in the U.S.
The maternity care picture is already deteriorating. In Georgia, St. Mary’s Sacred Heart Hospital leadership wrote when ending maternal health services that “changing demographics in our region, physician recruitment challenges, increasing outmigration for labor and delivery services, and recent Congressional cuts to Medicaid solidified this decision.” In Virginia, Centra Southside Community Hospital closed labor, delivery, and OB-GYN surgical services. In January 2026, Greene County General Hospital in Linton, Indiana, ended its obstetrics services.
Nearly 60% of rural hospitals no longer deliver babies. Since 2020, at least 117 rural hospitals have eliminated or plan to eliminate their labor and delivery units, amounting to an 11% reduction, because they are unable to meet the high operational costs.
Beyond maternity care, broader service lines are being cut. Public Citizen researcher Eileen O’Grady noted that “closure is the worst-case scenario, but it also doesn’t preclude hospitals from having to make really tough decisions about cutting services that might be essential to those communities but are just no longer financially viable.” Across the country, hospitals have already made statements warning they may need to lay off staff or scale back care, including maternity and mental health care, because of the Medicaid cuts.
Michigan-based health system Trinity Health said it expects to lose $1.5 billion due to “recent and future government policy changes” and has already cut 10.5% of its billing staff. A hospital it operates in Georgia, St. Mary’s Sacred Heart Hospital, has also closed its maternity unit.
The Safety-Net Hospital Crisis
Jennifer DeCubellis, president and CEO of America’s Essential Hospitals, says: “More and more hospitals and healthcare systems, in particular essential hospitals, are in trouble right now. So before those cuts even happen, people are having to make the hard decisions. Do we keep hospitals open? Do we keep all of our hospitals open? Do we have to have people drive further? Are there critical services – mental health, addiction, maternal care, pediatric care – that we have to look at differently?” Essential hospitals provided $11 billion in uncompensated care in 2025, and that figure is projected to rise by $1.7 billion in 2026.
While essential hospitals represent only 6% of the nation’s hospitals, they provide 29% of uncompensated care delivered by hospitals nationwide, 43% of the nation’s burn care beds, and 31% of America’s level one trauma units.
The work requirements provision is projected to cause a particularly sharp hit to these institutions. A 2025 analysis by the Commonwealth Fund found that net operating income for safety-net hospitals would decline by $2.4 billion to $2.8 billion as a result of Medicaid work requirements alone, reducing operating margins by 25.9% to 29.6%. That is a staggering compression for institutions that already operate with thin margins.
According to health policy experts at Johns Hopkins Bloomberg School of Public Health, Medicaid represents about 20% of hospital revenue on average, but for some – especially in rural locations – it’s more like 40% to 50%. Many rural hospitals are teetering on the edge already. If a person who has lost Medicaid coverage comes into the emergency department, the hospital is still required to treat them, under the Emergency Medical Treatment and Labor Act.
That mandatory treatment obligation, combined with vanishing reimbursement, is what creates an inescapable financial trap for safety-net institutions.
The $50 Billion Response – and Why It Falls Short
Congress included a $50 billion Rural Health Transformation Fund in the same legislation, distributed across five years at $10 billion per year. Supporters argued it would cushion the blow for rural hospitals. The math tells a different story.
According to KFF, the $50 billion in new funding could offset just over a third (37%) of the estimated cuts to federal Medicaid spending in rural areas – projected at $137 billion over ten years based on CBO estimates – or about 5% of the total estimated cuts to federal Medicaid spending of $911 billion over ten years.
While many of the major cuts related to Medicaid and the ACA Marketplaces under the law are not time-limited, the rural health fund is temporary, providing $10 billion per year through fiscal years 2026 through 2030 only.
There is a second structural problem with the fund. The Centers for Medicare and Medicaid Services has stipulated that no more than 15% of Rural Health Transformation Program funds can be used on hospitals or patient care, according to the Commonwealth Fund.
That means the program widely described by lawmakers as a “rural hospital fund” is, in practice, primarily forbidden from going directly to rural hospitals.
Alan Morgan, president and CEO of the National Rural Health Association, put it bluntly: “Fifty billion dollars over five years does not equate to $155 billion over 10 years. This particular issue was almost a shell game aspect of the legislation. It was put into the bill recognizing that rural hospitals could potentially close. The whole discussion on Capitol Hill was about ‘We’ve got to keep rural hospitals open.’ But the legislation itself specifically says RHTP funds cannot be used as an offset for Medicaid. And the administration in multiple avenues has specifically said this cannot be used to keep rural hospitals open, period.”
Now states are making decisions about how they will spend the first round of grants from the Rural Health Transformation Fund. In at least 25 states, there are plans to “rightsize” rural health systems – and, as NPR’s reporting suggests, it could involve cutting services in rural areas instead of saving them.
Read More: Medicare Denied a Dementia Patient’s Care – What You Need to Know
The Broader Consequences: Jobs, Access, and Community Health
The closure or downsizing of a hospital doesn’t just affect the patients who use it. It reshapes the economic and social fabric of the communities around it.
Gideon Lukens, director of research and data analysis at the Center on Budget and Policy Priorities, a nonpartisan research group, said: “When hospitals close, patients have less access to the care that they need. They have to travel further or wait longer in other hospitals that become overcrowded.”
House Republicans who voted for Medicaid cuts have 196 at-risk hospitals in their districts – meaning this is not a partisan outcome in terms of who gets hurt. The patients and communities at risk span both red and blue states.
According to Rural Health Today, 23 hospital closures were reported in 2025. As of January 2026, the Center for Healthcare Quality and Payment Reform estimates that 734 rural hospitals in the U.S. – one-third of all rural facilities in the nation – are at risk of closing.
According to health policy analysts at Families USA, a consumer health advocacy group, independent rural hospitals could lose more than half their net income by 2026 under the new rules – an average loss of about $630,000 per facility.
The Medicaid cuts come in phases, with more significant changes – including work requirements – beginning in 2027 and limits on how states raise Medicaid funds taking effect in 2028. This means the worst financial pressure on hospitals has not yet fully materialized. Many hospital executives and analysts warn that closures and service cuts already underway are a preview of what’s coming, not the full picture.
What This Means for You
The scale of what the One Big Beautiful Bill Act has set in motion is, by any measure, historic. The legislation cuts over $1 trillion from health programs – the largest rollback of federal support for health care in American history, according to the Center for Medicare Advocacy.
The 446 hospitals collectively holding nearly 69,000 beds and serving 6.6 million patients annually are at heightened risk right now, before the steepest cuts have even taken effect. The list, compiled by Public Citizen from CMS cost report data, spans 44 states and Washington, D.C. The full list is available directly through Public Citizen’s report, which allows readers to search for facilities in their own states.
For physicians and healthcare leaders, the core issue is not just whether hospitals close outright. It’s whether they begin trimming first: labor and delivery, behavioral health, outpatient specialty access, community-based programs, staffing levels, and other services that are often hardest to restore once lost. KFF specifically warned that hospitals under financial stress may respond by offering fewer services, laying off staff, investing less in quality improvements, or – in the worst cases – closing altogether. If you want to know whether your local hospital is among those identified as at risk, the Public Citizen report includes a searchable full list organized by state. Knowing where your hospital stands – and understanding what funding it depends on – is the first step in being an informed advocate for the healthcare access your community depends on.
AI Disclaimer: This article was created with the assistance of AI tools and reviewed by a human editor.
Read More: Trump Fires Entire National Science Board: What It Means