What Medicaid Cuts Mean For American Hospitals

0:01This week on Up First, with the president threatening to target Iran's civilian infrastructure, such as power plants and bridges, even as gas prices in the US continue to climb. What are the chances of an end to the war in Iran? Listen for updates every morning on the latest overnight news on Up First. Find us on the NPR app or wherever you get your podcasts.

0:29More than 80 million people rely on Medicaid. It's the single largest source of funding for states providing health coverage for low-income Americans and people living with disabilities. But President Trump's massive spending bill, which passed last year, is expected to cut the program by nearly a trillion dollars over the next decade. Hospitals could be among the hardest hit. Medicaid covers about a fifth of all hospital spending. That's according to KFF Health News. A new report from the progressive think tank Public Citizen predicts that more than 440 hospitals are at risk of closing or reducing services in the years ahead.

1:07In states like Connecticut, California, New York, Massachusetts, and Washington, Public Citizen projects that more than a quarter of hospitals are at risk of shuttering or cutting services. We should note that some hospitals named in the report challenged its findings. We'll hear what one of them shared later. But it's clear that obstetrics care could be hit especially hard by these Medicaid cuts. It's one of the most expensive services provided by hospitals, and Medicaid pays for nearly 40 % of all births in the U.S. So we'll talk about the future of delivery and labor units later on. But first, what does the potential loss of hundreds of hospitals due to these funding cuts mean for the quality and availability of health care in our country?

1:47I'm Jen White. You're listening to the 1A Podcast. We'll be back with more after this quick break.

1:57Welcome back to the 1A podcast. We're talking about the effects of Medicaid cuts on hospitals and medical care in the U.S. Let's get into it and meet our panel. Joining us in studio is Julie Rovner. She's Chief Washington Correspondent for KFF Health News. She hosts their weekly health policy podcast, What the Health? It's distributed by our producing station, WAMU. Julie, it's always great to have you on. Always a pleasure to be here. Also with us is Dr. Howard Foreman. He's a professor of radiology and biomedical imaging, health policy, management, and economics at Yale University. He remains an active clinician in the Yale New Haven Hospital emergency room.

2:34According to that public citizen report, Connecticut is one of five states with a quarter of their hospitals at risk. Dr. Foreman, it's great to have you. Thanks for having me on. Now, we reached out to the White House for a statement, but they did not get back to us in time for this conversation. So, Julie, as we said, roughly a fifth of all hospital spending is funded by Medicaid. What all does that money go to? It goes to everything. You know, money that goes into hospitals, funds all of the activities. The labor is obviously the biggest part of it. All of the high-tech care, the medical records, the real estate, the maintenance.

3:10I mean, everything that basically makes a hospital function. Remember, hospitals are 24-7, 365 organizations. and it takes a lot to keep them going. So Dr. Foreman, what services are at risk of being reduced due to Medicaid cuts? What could we see first? Yeah, as you mentioned, I think maternity care, obstetric care is probably high on the list as we've already seen that it's the service that's most vulnerable to closure. Hospitals that have obstetric wards will oftentimes shut them down if they believe that they can provide that service in another part of the state, either within their own health system or within another health system.

3:49It's a low margin service line, partly because of so many Medicaid patients. Medicaid tends to be either a low or negative margin payer for most services. And then beyond that, behavioral health services, mental health services, substance use disorder treatments, and sort of beyond, I can go to a narrow category, I think, which is things like sickle cell treatment, which so much innovation has happened in the last few years, but it's still a low or negative margin business, and it's a majority of patients with sickle cell are Medicaid patients. As a clinician, what knock-on effects do you see?

4:30If some of these services are reduced or go away altogether from certain hospitals, what happens further down the line if someone's not able to access that care? Well, so we expect that many of those same patients who would be getting access perhaps in an outpatient hospital clinic or even an outpatient non-hospital clinic will now have to seek care in the emergency room, the emergency rooms that are already overburdened in our system and all systems nationwide. And bringing in more undercompensated care to the emergency room basically means that costs have to be spread out over a different population.

5:10It means you may be curtailing at other services. And the ripple effects and the vicious circle that begins ultimately leads to worsening care for everybody. We got this from Tom who emails, my local hospital closed because of a hacking attack that destroyed their billing. The next closest hospital had just reopened after being closed for several years, but with reduced bed space and expertise. This past February, my 92-year-old mother needed hospitalization that required her to be moved 80 miles at 2 in the morning in blizzard conditions. Snow, 45-mile-an-hour winds, 3 degrees below zero. Of the three hospitals in a 40-mile radius, one is scheduled to close by 2028.

5:53Earlier this year, all 60 of the beds were full due to the flu. Julie, there are roughly 6 ,100 hospitals in the U.S. But when we're trying to understand potential closures in what's already a strained healthcare system, how are you trying to understand what this all means? Well, I think one of the things that people sort of forget or miss or don't get in this whole thing is that when hospitals close, when services are curtailed, it's not just the people who are on Medicaid or the people who were kicked off of Medicaid who are affected. It's everybody who needs care in that area. Health care is geographic more than anything else.

6:34If it doesn't exist where you live, you have a problem. And, you know, one of the things we know is that hospitals are often the largest employers in many of these, not just small towns, but even mid-sized cities. The hospital is often the largest employer. So if you lose the hospital, you're going to lose a lot of jobs. Often a whole town will end up sort of falling apart if the hospital closes because there's no health care available. So it's not just these specific services and these specific people. It's a piece of an overlying organism that is the health care system in the United States. We reached out to Dr.

7:09Elaine Batchelor. She's the chief executive officer at Martin Luther King Community Health Care in Los Angeles. That's one of the hospitals listed in the public citizens report as being at risk of closing or cutting services, and here's what she shared. Every patient we care for comes to us through our emergency department. As a safety net hospital, we're not providing elective care. The only discretionary service we provide in the hospital is labor and delivery. We could close labor and delivery, but that would not be nearly enough to close the HR1 funding gap. While our hospital is a critical healthcare access point for people who can't get healthcare elsewhere in our underserved community, I am most concerned about the possibility of having to eliminate disease management programs.

7:56For example, our diabetes management program is saving both lives and money. Rather than reducing access to programs that help people stay healthy and avoid hospitalization for expensive complications like amputations and kidney failure, in the case of diabetes, we should invest more in prevention and disease management. Lastly, almost all our patients rely on funding from Medicaid. The cuts in H.R. 1 represent about 20 % of our revenue. Our health system simply cannot absorb a loss of that magnitude. Thanks for that message, Dr. Batchelor. Dr. Foreman, you're a doctor in Connecticut. That public citizens report says nearly a quarter of the hospitals in that state could now be at risk of closing or cutting services.

8:44Now, your hospital, Yale New Haven, isn't directly at risk. According to this report, one of its affiliates, Bridgeport Hospital, is. How are you seeing Medicaid cuts affecting your community so far? Well, some of it is what we're not seeing. And in a time when we would have more access to reimbursement or appropriate reimbursement, what you'd like to see is Medicare reimbursement going up for some of the hospitals that are already at risk for closing. We're not seeing that. And you'd like to see programmatic expansions, as I mentioned, sickle cell being one example. But there are other types of care that could be expanded that hospitals are not apt to expand right now purely because they don't have the access to operating cash at all.

9:29And in many cases, a lot of these hospitals are running a deficit even before the cuts come into place. So what we're seeing is a retrenchment. Each hospital that I am affiliated with, and I do cover personally Bridgeport Hospital, so I am familiar with that as well. Each of these hospitals is looking at ways to cut down on spending, and that may mean reducing nurse-to-patient ratios. That may mean reducing administrative costs, which if it's purely about efficiency, that would be a good thing. But it may be about curtailing the expansion of a new outpatient clinic or follow-up for patients. And let me just add one other thing because we haven't mentioned it yet, and that is three of the greatest innovations of the last 30 years is in areas of stroke, in areas of heart attacks, and in areas of trauma care.

10:22And all of those rely on rapid access to medical care. And when you close hospitals, you increase the distance of the injured person or the person having a heart attack or stroke to getting to the hospital. and that decreases the likelihood that they will survive the event. Well, we have to take a short break, but when we come back, we'll talk more about how access to care will be affected by Medicaid cuts. And later, we hear from the director of a group that's tracking the closure of labor and maternity units in rural areas. Stay with us.

10:59Let's get back to our conversation about what Medicaid cuts mean for hospitals and medical services. We've been talking about the report from Public Citizens. It includes a list of hospitals they say are at risk of closure or cutting back on services. Now, some of the hospitals on that list have rushed to reassure their communities that they are not closing. Here's what Hill County Hospital in Greensboro, Alabama had to say. Quote, recently, a flawed report from a progressive organization incorrectly suggested that Hill County Hospital may be at risk of closure. We want to clearly reassure our community, partners, and patients Hale County Hospital is not facing closure.

11:37While we recognize the broader challenges impacting rural health care across the country, our hospital remains operational, stable, and deeply committed to serving the people of Hale County and the surrounding areas. Reports that categorize hospitals using national-level data models do not always reflect the full current picture of an individual facility. You can read the full statement at halecountyhospital.com. Julie, what should we keep in mind when we're using this kind of data to try to understand what's happening in the health care system right now? Well, you know, data is not always, data is usually not up to date.

12:13I mean, it's always lagging by at least a year. I'm pretty sure this report used 2023 and 2024 data. And, of course, they didn't say that these hospitals are likely to close. It calculated how much they rely on Medicaid compared to what the data suggested they were looking like financially at that point. So some of these hospitals are going to be able to survive. Some of them may be able to survive with fewer services, as we've been discussing. Some that are not on the list may not make it for other reasons. You know, I describe the U.S. health care system as an organism, and it's getting affected from all different ways.

12:53It's interesting that the Republicans, when they were passing H.R. 1 last year, what they called the big, beautiful bill, thought that they were cleverly backloading these Medicaid cuts to not take effect until after the midterms, which is true. But what's happened is that a lot of states and many health care organizations, seeing what's coming at them, are doing their budgeting now. And we're starting to see cuts happen already in advance of the federal cuts. Well, we've also talked a lot, Julie, about the rural health care system. But what are you observing about what's happening in city centers, large and midsize cities, in their health care?

13:30Yeah, people assume that, you know, because you're in a city, if a hospital closes, you can go to another hospital. That's not always the case. Transportation is not always widely available. We did a story some years ago about people in Baltimore, which, you know, has lots of hospitals. But it would take some of them, you know, three or four different buses to get even to an outpatient clinic. So a lot of these safety net hospitals, as we were talking about in the last segment, are located in areas with big populations of need that cannot easily get to other places. And also, there are more people in the urban areas, so there are more people on Medicaid.

14:07And it's going to be a bigger impact to a lot of these urban hospitals than to some of these rural hospitals. Well, I want to play this clip of Dr. Shannon Dowler. She's a family physician in Western North Carolina. And she's speaking on the New York Times podcast, The Daily, to Natalie Kittroweth about what Medicaid cuts could mean for patients living in rural communities like hers. The nearest hospital would be in Asheville. And it's about probably 50-minute to 60-minute drive, depending on traffic. We did have a hospital closer in Irwin, Tennessee, but it got flooded in Hurricane Helene and so has closed down completely.

14:41Until 2023, Medicaid coverage in North Carolina was pretty limited because this was one of the states that was the very last to expand Medicaid as part of the Affordable Care Act, right? I'm wondering, what was it like to practice in North Carolina before the expansion? Like, how did people get their health care? What did that look like? It was often heartbreaking. we took care of so many people that had lives that were ended or altered with preventable diseases or curable diseases. And instead they died in their 40s or 50s. And they were working, the working poor. They were going to work every day, but couldn't afford health insurance.

15:26We did the best we could to cobble together their health care for them. But at the end of the day, we couldn't amputate their leg. They would have to see a surgeon for that. And without health insurance, that was a challenge. As far as putting their whole healthcare picture together, it was often impossible. One was a gentleman who in his 50s had end-stage liver disease. He had hepatitis C infection, which is a very curable infection if you have access to medications. And he also had pretty significant bipolar disorder and alcohol abuse. And that combination with no health insurance at all was deadly for him.

16:03So with his hepatitis C infection, even if we could have found a GI specialist who would take him as a patient, the problem is they wouldn't treat his hepatitis if he was using any alcohol at all. But we couldn't get him into a psychiatrist to treat his bipolar disorder, which is why he used the alcohol, was to deal with his sort of crushing depression. So it was just this constant sort of undulating healthcare experience. I took care of him for well over five years. And I was in the ICU with him an hour before he died, holding his hand and telling him this was it. This was the last hospitalization because he wasn't going to make it through this one.

16:41And how tragic that that was something that we could have fixed for him. And we did it. He died from it. There are roughly 2 ,000 rural hospitals serving around 60 million Americans. Over 40 % of those hospitals operate at a loss. And we got this question from one of you. Could you please comment on the Rural Health Transformation Fund and its impact for this first year of program distribution to the states and ultimately to the rural health systems? I see an interest in the rural health systems, but difficulty in their ability to write and complete applications for that funding. Now, that person is referring to a part of the big spending bill.

17:20It's$50 billion in funding for rural hospitals as part of the federal Rural Health Transformation Program. First, Julie, Julie, how far will that money go to offset Medicaid cuts for rural hospitals? Not very far. Remember, the Medicaid cuts are almost a trillion dollars, 900 and some odd billion. This is$50 billion. So right there, just the math doesn't math. Also, the way the administration is distributing this money, it's not really going to the same places that hospitals are going to lose money because they're going to have more patients that don't have insurance. It's for other things, including in some cases they're giving preference to states that adopt policies that fit within the Make America Healthy Again, you know, rubric that's being pushed by HHS Secretary Kennedy.

18:09So there's not a lot of hope that this is going to plug much of the hole. Although there is a lot of, you know, there are a lot of good programs and states have been working very hard to come up with their applications to get parts of this money so that they can do a better job providing rural health care, which was in a problematic state even before these cuts. Dr. Foreman, rural or urban, hospitals aren't likely to turn away patients even if they're stretched really thin. And I'm curious first about what that means for morale in hospitals when there are fewer resources, potentially more patients, and just less capacity to serve the people who need help.

18:53yeah and and pointedly more under compensated or uncompensated patients so you're bringing in more volume but you're not bringing in the payments that cover their cost of care which means it has to get covered somewhere else in the hospital which means hospitals will either pursue something that is profitable which is fine it may be cancer care it may be joint replacements but it's not serving the immediate acute needs of the community as we mentioned stroke care trauma care cardiovascular cardiovascular care, acute abdominal emergencies, and wait times go up. And when wait times go up, it means delayed care goes up as well.

19:33And so as well as everybody tries to do their job, it becomes that much harder when you're finding more and more patients being shuttled to emergency rooms rather than to outpatient clinics or to their local hospital where they could have more urgent care rather than emergent care. And what does that in turn mean for the quality of care patients receive? Well, we would hope the quality of care doesn't go down, but the reality is that when you're trying to force more work on fewer people, your quality of care can and probably does suffer. And that affects everybody. It doesn't affect just the Medicaid patients or just the uninsured patients.

20:14It affects everybody. And it means that the individual who usually would go to the emergency room for immersion care may be dissuaded from going to the emergency room because a three-hour wait seems too long. And they wait at home till the next day when they might be able to see their private physician, but that might be too late. There's so many ripple effects from this that are not being contemplated here that do have adverse consequences for the entire population. Well, Julie, we've also talked about the American shortage of nurses. The American we have a nursing staffing crisis right now. The shortage is projected to continue for more than a decade.

20:57It's higher in rural areas. They're not finding enough people to sort of fill that pipeline to get more nurses into our healthcare system. So how will these cuts exacerbate just that staffing piece of this issue? Well, as I said, labor is the biggest cost for most hospitals. Also, this is where immigration comes in. We're now having visa issues. Many of our nurses come from other countries. Many of our doctors come from other countries too. The administration is making it more difficult for health professionals to immigrate to this country. And foreign doctors and nurses are the ones who are more likely to end up in these rural areas because people educated here, you know, and U.S.

21:37citizens mostly would rather be in the cities and the suburbs unless they're from those rural areas. So that you will see sort of an overabundance, if you will, of these foreign medical professionals in these further flung areas. And if it's harder for them to get here from the other countries where they've been trained, that's another issue that, you know, follows on of this big ripple effect. We got this email from David who says, I'm very fortunate to be in Cleveland where we have three major hospital systems and I have personal transportation and family support, and I am finally on Medicare.

22:12Even given all that, trying to get an appointment sometimes takes four months or more. As a social worker, my clients often have much more difficulties in accessing health care. The big thing is that we shouldn't be deciding on policy only based on how it affects ourselves. It's a much bigger problem with wider impacts, and it's a system that has been in crisis for many years. Health subsidies that reduce the cost of health insurance under the Affordable Care Act expired earlier this year. So that's higher health costs for at least 20 million Americans. Some premiums rose as much as 114%. How does that, Julie, intersect with the Medicaid funding for hospitals to make health care more expensive and potentially less accessible?

22:56Well, again, it's more people without health insurance. It's sort of the same problem for the hospitals. You've talked about how hospitals don't want to turn patients away. Hospitals legally cannot turn patients away who are in emergencies. That's what EMTALA is about, the Emergency Medical Treatment and Active Labor Act. So they have to at least screen you and stabilize you. That is a federal law if you have an emergency room. So they have no choice if you come in without insurance. Again, they've got to find, you know, a way to pay for that somehow. If you have people who are losing their Medicaid, We have people who are losing Medicare.

23:29Also, many of the things that were done in the big bill last year made it more difficult for people to qualify for both Medicaid and for many immigrants for Medicare. So there are a lot of people who are no longer going to have insurance. And then these people who can no longer afford their Affordable Care Act insurance. And, of course, the people who are hit the hardest with those bigger increases tended to be older patients, those nearing Medicare eligibility, who have more medical needs. So you can see it all just sort of piles onto each other and puts the onus for who's going to pay for these people when they need care.

24:04We got this from Paul who writes, I think a lot of politicians hate the idea of spending money on what they perceive as giving people something that they haven't earned. What they may not be considering is that when they end up in the ER, it will cost a lot more. Now, Dr. Foreman, as we said, you're a professor at Yale University. you're also a clinician, an emergency room, and an ER is already a stressed arm of many hospitals. So then you add to this people who may not be able to access primary care, ending up in an ER for health issues that might have been preventable. So how are you seeing the connection between both the preventative care access, but also the ability of emergency rooms to absorb this perhaps increasing number of patients who are ending up in an ER for an issue that could have been prevented.

24:53Yeah, as your earlier clip indicated also, it is far better to be able to have patients managed under non-acute circumstances with the best medicine available to reduce things that will lead to long-term complications. Treat diabetes even before it develops. And once it develops, at least treat it well so that patients don't develop vascular or kidney disease. And once those develop, at least be able to manage those well so they don't come back to the emergency room. Once you skip over all those steps, patients do flood the emergency room. And what's worse is that when Medicaid cuts are occurring and fewer people are covered by Medicaid, so they're fully uninsured at this point, those individuals become even harder to place on an outpatient basis.

25:39So you no longer can discharge someone from the hospital and expect them to have routine follow-up easily if you can't even find a specialist who will see that patient. And outside of academic medical centers, which are sort of already overwhelmed, as one of your guests mentioned, it's hard to get appointments, you're going to have great difficulty being able to refer a patient for a first evaluation by a nephrologist if you're also telling them that there is no insurance. And so some states have charitable funds. There are some additional funds that may be available. But as those funds get diverted to fill in the gaps from Medicaid, there's just fewer and fewer dollars available to do what is necessary.