Op-ed: Federal health equity cuts shift the burden downstream—to hospitals

Imagine a patient who’s 74 years old and lives alone. After being hospitalized for heart failure, she leaves with medications, a follow-up appointment, and instructions to reduce sodium in her diet. Clinically, she’s stable. Now, more than ever, whether she remains healthy may depend more on which state she lives in and less on what happened in the hospital.

Federal policymakers understood for years the impact of social determinants of health (SDOH)—nonclinical factors that affect health outcomes—and research has consistently shown that housing, nutrition, transportation, education, and economic stability play major roles in good health and longevity. Under a national health equity framework, the government built programs and supported community organizations to address these challenges. [1]

The Trump administration, however, has been stepping away from health equity programs and fired nearly 20,000 Department of Health and Human Services (HHS) employees who shaped how billions of dollars flowed from appropriations bills to patient care. So while Congress is still funding some health programs, the federal workforce has become too lean, and states must fill the operational gaps. In effect, it also means hospitals and health systems are on the hook even more to resolve systemic health inequities.

In recent years, hospitals across the country have been absorbing the consequences of housing instability, untreated behavioral health conditions, transportation barriers, and caregiver shortages while facing coverage losses and fewer public health resources. The financial landscape isn’t great, either: A March analysis found that federal Medicaid reductions could place 446 hospitals at heightened risk of closure or service cuts, threatening nearly 69,000 hospital beds nationwide; the Center for Healthcare Quality and Payment Reform also recently reported the majority of states are at risk of seeing 25% or more of their rural hospitals close.

What’s the federal government doing?

Previous Republican and Democratic administrations embedded health equity language and priorities into the work of the Centers for Medicare and Medicaid (CMS), HHS, the National Institutes of Health (NIH), and other federal public health agencies. For example, the Biden administration expanded health equity efforts through executive orders, agency strategic plans, Medicare and Medicaid demonstrations, payment reforms, and research initiatives. [2]

By contrast, one of the most striking things about recent federal budget documents is how difficult it is to find the phrase “health equity.” The Trump administration’s 2027 HHS Budget in Brief largely replaces that framework with language focused on agency consolidation, [3] chronic disease prevention, government efficiency, and the Make America Healthy Again initiative.

The erosion then moved from language to enforcement. A May White House proposal would bar federal grants from research built on disparate impact theory—the idea that a seemingly race-neutral policy may still be discriminatory if it disproportionately harms a protected group—which researchers say could disqualify most health disparities work outright.

Congress, on the other hand, seems to support health equity initiatives, with recent appropriations bills preserving funding for many minority health, maternal health, HIV, and disparities-focused programs. The 2026 enacted budget provided approximately $45 million for the HHS Office of Minority Health, $56 million for the Minority HIV/AIDS Fund, and $73 million for NIH’s IMPROVE Initiative focused on maternal mortality disparities, to name a few. Further, the House 2027 Labor–HHS bill would provide $547 million for minority health and health disparities research for the National Institute on Minority Health and Health Disparities. Other efforts in Congress are looking to not only invest in initiatives but also restore dismantled health equity programs.

But what are we facing right now?

50 solutions in 50 states

As federal public health capacity shrinks, states are forming regional partnerships, such as the Northeast Public Health Collaborative and the West Coast Health Alliance, to share expertise, coordinate data, and develop public health guidance. At the same time, states are pursuing widely different approaches, creating wider variation in the programs hospitals and insurers can offer. As a result, patient care is being dictated more by state policy rather than medical need, potentially resulting in disproportionate rises in expensive emergency department visits, hospital readmissions, [4] and total cost of care in certain states.

More than half of the 70 million Medicaid beneficiaries—that’s roughly equivalent to the population of France—live in states implementing Medicaid-supported housing, nutrition, and other social support interventions. Some of these are achieved via pathways like section 1115 waivers, which have become critical tools states have used to establish social supports [5] and have been proven to reduce readmission rates and cut down on healthcare costs. States are also using a patchwork of managed care contracts, state appropriations, behavioral health funding, public health investments, and community partnerships to pursue goals that were once more solidly supported by federal initiatives.

Some states have been quite proactive and made improvements.

Take California’s CalAIM initiative, which provides enhanced care management, behavioral health integration, housing-related services, and community support through the state’s Medicaid program. Or there’s New York, which has invested heavily in social care networks designed to connect healthcare providers with community-based organizations. North Carolina, too, has tested partnerships addressing food insecurity, housing instability, transportation barriers, and interpersonal safety concerns.

Preliminary reports suggest these programs can be effective. Early evaluation results from North Carolina’s Healthy Opportunities Pilots, for example, found that Medicaid expenditures initially increased but later declined by about $164 per beneficiary per month compared with a control group, largely driven by reductions in emergency department utilization.

Other states, however, have taken a different approach over the years.

Texas, for one, has not pursued comparable health-related social needs initiatives. Arkansas used its section 1115 authority to implement Medicaid work requirements rather than expand social supports, leading to more than 18,000 coverage losses before federal courts halted the policy in 2019. States like Mississippi and Alabama, which have maintained more traditional Medicaid models focused on clinical services, have not adopted broad section 1115 health-related social needs demonstrations or comparable statewide Medicaid social supports.

Section 1115 demonstrations were created to fund innovative care-delivery pilot programs in states and were never meant to become permanent healthcare funding solutions. According to the Centers for Medicare and Medicaid (CMS), they now account for nearly one-third of all Medicaid spending, and the Trump administration has been looking to scale back Biden-era expansions for nonmedical services, like nutrition or housing. Last year, CMS said it would no longer accept demonstrations for SDOH-focused programs, and in June, the agency announced plans to strengthen oversight through new budget neutrality and actuarial review requirements beginning in 2027 (though recent actions involving California, Minnesota, and New York raise questions about how consistently those standards will be applied across states).

The bottom line

These increasing geographic variations raise the stakes the most for hospitals and health systems caring for older adults, people with disabilities, and the nearly 12 million Medicare and Medicaid dual-eligible beneficiaries. These are the most medically complex and expensive populations who are also more likely to experience housing instability, food insecurity, transportation barriers, and caregiving challenges.

The data speaks for itself: An April Commonwealth Fund analysis shows no state had closed the health equity gap on its own even before this year’s Medicaid and Affordable Care Act cuts. Recent hospital earnings already point to rising uncompensated care as coverage losses grow. For hospitals, the question is no longer whether states will take different paths—it’s how wide those differences will become, and how much geography will determine the care patients receive.

The author has contributed this piece in his personal capacity. The views expressed are his own and do not necessarily reflect those of his current or former employers.