More than 400 hospitals across the United States are at high risk of closure or being forced to slash essential services due to sweeping Medicaid cuts enacted by Congress, according to a new analysis that warns of a looming crisis for healthcare access and hospital finances.
The Scale of the Threat
The report from the progressive watchdog organisation Public Citizen identifies 446 hospitals in 44 states and Washington D.C. that are financially vulnerable. These facilities collectively serve 6.6 million patients and employ over 275,000 workers. The analysis, which used data from the Centres for Medicare and Medicaid Services covering 95% of US hospitals, defined “at-risk” hospitals as those where total expenses exceeded income from 2022-2024 and where Medicaid or related programmes constituted 20% or more of their revenue.
The financial threat stems from the “One Big Beautiful Bill Act” (OBBBA), signed into law on 4 July 2025. The legislation aims to fund tax cuts by reducing spending on health programmes, with the Congressional Budget Office estimating its provisions could lead to 11.8 million people losing health coverage by 2034. The Centre on Budget and Policy Priorities projects approximately 8 million will become uninsured in that period.
How the Cuts Will Strangle Hospital Finances
The OBBBA imposes approximately $1 trillion in Medicaid reductions over the next decade, implementing a series of technical but profound changes to the programme’s funding and eligibility. The American Hospital Association estimates these cuts would result in a $50.4 billion reduction in federal Medicaid spending on rural hospitals alone over ten years.
From December 2026, the Act imposes new “community engagement” requirements, mandating certain Medicaid enrollees to document 80 hours per month of work, volunteering, or education to maintain eligibility. The Centre on Budget and Policy Priorities estimates this will cause 5.2 million adults to lose coverage when it takes effect on 1 January 2027.
Simultaneously, the legislation dismantles key financial supports for states. It eliminates the enhanced federal matching funds—a 5% increase available under the American Rescue Plan Act—that encouraged states to expand Medicaid, effective December 2026. Furthermore, it caps what the federal government will pay for Medicaid services, limiting payments to 100% of Medicare rates for expansion states and 110% for non-expansion states, while restricting how states can finance their share of the programme.
For hospitals already under severe strain, these changes create a perfect storm. The loss of millions of insured patients will directly throttle revenue for facilities that depend on Medicaid. At the same time, the capped payment rates and restricted state financing will make it harder for hospitals to cover the cost of care for the patients they do see. The Public Citizen report warns this will have “knock-on effects,” deepening the financial strain on hospitals that serve vulnerable communities and “compromising their ability to deliver care.”
The repercussions extend beyond Medicaid patients. Analysts warn the financial strain could force hospitals to increase prices for commercially insured patients to compensate for losses, while the American Hospital Association suggests up to 477,000 healthcare jobs could be eliminated.
Communities on the Front Line
The impact will be felt unevenly, with rural and urban safety-net hospitals facing the greatest peril. The American Hospital Association estimates 1.8 million rural individuals will lose coverage by 2034. This is particularly devastating as over 150 rural hospitals have closed since 2005, and over 60 million Americans live in rural areas. Kentucky faces the highest number of at-risk rural hospitals, with an estimated 35 closures projected in the state alone.
A separate analysis by the Harvard T.H. Chan School of Public Health identified 109 hospitals at high risk, 85% of which are urban “safety-net” hospitals serving high proportions of low-income and minority patients. These facilities, which often operate on thin margins and provide high levels of uncompensated care, are ineligible for the Trump administration’s $50 billion Rural Health Transformation Programme—a fund that covers only about a third of projected Medicaid losses in rural areas anyway.
While states like California, Connecticut, New York, Massachusetts, and Washington have more than a quarter of their hospitals at risk, the crisis crosses political lines. Public Citizen notes that 342 at-risk hospitals are in the districts of House and Senate Republicans who voted for the OBBBA cuts, including nearly 200 in House Republican districts and nearly 150 in states represented by Senate Republicans.
In all states, nearly 20% of the 446 at-risk hospitals serve high-poverty areas, and these facilities serve a larger share of Black and Hispanic residents. The human cost of reduced coverage is stark: analysts project the cuts could lead to 16,642 premature adult deaths annually due to lost insurance.