The One Big Beautiful Bill is expected to bring numerous changes to healthcare, including $1+ trillion in cuts to federal spending in the Affordable Care Act (ACA) marketplace and Medicaid over the next 10 years.
There’s one community that’s expected to see a particularly big impact from these changes: rural patients. Rural health already faces unique challenges, like staff shortages, lower salaries, and less specialty care. While the bill allocated $50 billion for a “rural health transformation program,” experts still fear the money will not be enough to keep these already struggling providers afloat and may even lead to facility closures.
“Something is going to collapse,” Lora Sparkman—a partner and VP of clinical solutions, patient safety, and quality for workforce management company Relias—told Healthcare Brew. “It’s going to be the already fragile and underserved, and that’s rural healthcare.”
Coverage cuts
Cuts to public insurance funding are a particularly big concern, as KFF reported almost 1 in 4 people in rural areas rely on Medicaid and 17 million people (on top of the 25.3 million uninsured US children and adults as of 2023) could lose insurance due to the changes.
Some insurance loss will also likely occur due to new Medicaid work requirements (effective Dec. 31, 2026) in 40 states, requiring some enrollees to prove they have employment to get public health insurance unless they have a disability, are in school, or have children. Research shows this kind of policy is more likely to remove patients from insurance than actually push people to work.
Katherine Hempstead, senior policy officer at healthcare research organization the Robert Wood Johnson Foundation, told us work requirements will “make it harder” for people to access Medicaid “even if they’re eligible.”
The bill also doesn’t extend premium tax cuts funding, which are credits designed to make care through the ACA marketplace more affordable. The credits are now set to expire at the end of 2025, which will mean higher healthcare costs for US residents—specifically, a $313 increase in premiums and a $900 rise in out-of-pocket maximum for a household of four with an annual income of $85,000 in 2026, nonpartisan research and policy institute the Center on Budget and Policy Priorities projected in April.
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Healthcare research foundation the Commonwealth Fund reported in June the bill’s cuts to Medicaid and SNAP benefits, a federal food assistance program administered by states, could cause a $154 billion loss for state revenues by 2029 and cut 1.2 million jobs mostly in healthcare and food-related businesses.
Sparkman said she’s concerned rural hospitals may close as a result of these cuts. Rural providers already operate at a loss or “razor-thin margins,” she said, and cutting Medicaid will only make that worse.
Compared to metropolitan hospitals, where operating margins average 5.4%, operating margins for rural hospitals averaged 3.1% in 2023. For hospitals not near “any substantial population center,” the margins are even lower at 1.7%, according to KFF.
“Rural areas are poorer, and rural areas have less employer-sponsored insurance, so the hospitals are really depending on these more public programs to give them revenue,” Hempstead said.
$50 billion fund
As for the $50 billion rural health fund meant to address some of these challenges, Hempstead said the money is “not enough,” especially considering it’s a one-time fund.
The fund is designed to dole out $25 billion “equally” to states that apply with a “detailed rural health transformation plan over five years.” Centers for Medicare and Medicaid Services (CMS) Administrator Mehmet Oz will decide which states receive the other $25 billion, depending on how many people live in a rural area, the number of rural hospitals compared to nationwide rates, as well as other issues that “the administrator deems appropriate.”
CMS did not respond to a request for comment by publication.
Sparkman said adopting artificial intelligence could help rural hospitals respond to these challenges, as could using telemedicine and enhancing education and training.
Hempstead, meanwhile, remains skeptical of the fund’s effectiveness.
“I don’t think [the rural health fund is] an adequate response,” she said. “It’s not like everything was fine till you passed this bill. I don’t think this hospital fund is going to solve the problems created by this bill, nor is it going to solve the deeper problems with rural health.”