AMA very concerned 'Big, Beautiful Bill' will accelerate closure of more rural hospitals
Rural hospitals have been closing at an alarming rate over the past decade, reducing access to care for millions of Americans—and the "Big, Beautiful Bill Act" (H.R.1), signed into law by President Donald Trump last week, will likely accelerate these closures.
For starters, the federal tax and spending bill includes more than $1 trillion in cuts to Medicaid. This forces states to either cover the funding gap themselves or implement cuts—such as reducing provider payments, eliminating certain care services, or tightening eligibility requirements. According to estimates from the Congressional Budget Office (CBO), the legislation could result in 11.8 million Americans losing health insurance by 2034. If rural hospitals are left to absorb the cost of treating a growing number of uninsured patients, many may be forced to shut down, especially since they often operate on razor-thin margins or even at a loss.
The law also gradually lowers the “safe harbor” threshold for expansion states. In doing so, it will force those states to reduce existing provider taxes, leaving those states without funds typically used for Medicaid.
While this change represents one of the largest federal savings in the legislation, it could significantly reduce, or even eliminate, access to care for some Medicaid beneficiaries. States often rely on the extra revenue generated through provider taxes to increase reimbursement rates for hospitals and expand coverage.
Although some congressional Republicans have characterized this practice as a “money laundering scheme,” reducing provider tax flexibility is likely to create substantial funding gaps in state Medicaid budgets—which keeps rural hospitals afloat.
"Part of this bill would take that away and there will be rural hospitals that cannot stay open. They're already struggling and if you take away the reimbursement from Medicaid that they get from the additional funds they draw down, they will close and we will have a shortage of hospitals," explained American Medical Association (AMA) Board of Trustees Member Scott Ferguson, MD, a diagnostic radiologist, in an interview with HealthExec.
He saw the benefits of the provider tax firsthand during his time in the Arkansas state legislature, when the state used it to support hospitals, nursing homes, and managed care organizations (MCOs), helping to keep the Medicaid system afloat.
AMA sounded alarm as Congress voted on bill's passage
In the lead up to the passage of bill, the AMA expressed concerns about the Senate budget-reconciliation bill in a long letter to Senate leaders. The AMA cited cuts to Medicaid and the Children’s Health Insurance Program (CHIP) funding, as well as changes in eligibility criteria that will reduce patients’ access to care and affect the viability of physician practices, particularly in rural and underserved areas.
“Patients across the country are already struggling to access care,” AMA President Bobby Mukkamala, MD, said in a statement. “Physician burnout, early retirements, and with the cost of running a practice constantly rising, the challenge of keeping a practice financially afloat are contributing to a physician shortage expected to reach 86,000 by 2036.
He said limiting access to a physician does not make patients healthier, in fact it "it increases the risk of turning acute, treatable issues into costly chronic conditions. As work continues on this bill, we urge senators to listen to patients and physicians before making changes that reduce access to care."
The AMA letter explained that in many communities, Medicaid is a major source of health insurance coverage or the primary payer. Medicaid payments are a crucial source of funding without which providers might be unable to continue operating, jeopardizing access to care in those communities, particularly in rural areas.
For more, watch the full interview video above.
Dave Fornell has covered healthcare for more than 17 years, with a focus in cardiology and radiology. Fornell is a 5-time winner of a Jesse H. Neal Award, the most prestigious editorial honors in the field of specialized journalism. The wins included best technical content, best use of social media and best COVID-19 coverage. Fornell was also a three-time Neal finalist for best range of work by a single author. He produces more than 100 editorial videos each year, most of them interviews with key opinion leaders in medicine. He also writes technical articles, covers key trends, conducts video hospital site visits, and is very involved with social media. E-mail: [email protected]