The $1 trillion cut in Medicaid spending in the Big Beautiful Bill largely comes from two actions: (1) imposing work requirements on Medicaid recipients and (2) restricting the ability of States to use provider taxes to fund the State responsibility for Medicaid spending.
So, I’m a nobody but would like some feedback on my understanding of the situation: I’ve gone way down the rabbit hole trying to understand the big beautiful bill’s potential impact on rural hospitals. It seems that most of the harm would come from the ratcheting down of the so-called safe harbor rate discussed above - but that wouldn’t even start until 2027 (notably after the midterm election 🙄) and settling upon a final rate in 2032. If it actually goes through the entire process, the results would be devastating - but I’m half-convinced many of the “yes” votes were made with the assumption that someone more responsible would come along and fix it before it’s too late. With Blue Wave elections in ‘26 and - vitally - ‘28, it might be possible. Otherwise, rural hospitals really might be in major trouble (conveniently after many of the people responsible are no longer around to face the consequences).
Bret--I'm a nobody as well. and certainly no expert, but here are some thoughts. First, I agree with you that in 2026 the changes in this bill will not yet affect many people. The extension of the tax cuts simply keeps the status quo so voters won’t see any changes in their taxes. The Medicaid cuts don’t begin until 2027—after the Midterm. I do think that it is possible that we will start to see rural hospitals affected by the Bill before 2026. While the Medicaid cuts don’t take effect until 2027, both States (who will need to adjust their Medicaid budgets because of reduced provider taxes) and Hospitals (who will be facing severe financial loss in 2027) may well take action before 2027. This is because they will need to take action now to avoid disaster in the future. Given the magnitude of this impact, we would expect hospital and community centers to make changes now—and not wait until 2027. Indeed, one hospital in rural Nebraska has already announced that it will close its doors due to anticipated federal budget cuts to Medicaid.
So, I’m a nobody but would like some feedback on my understanding of the situation: I’ve gone way down the rabbit hole trying to understand the big beautiful bill’s potential impact on rural hospitals. It seems that most of the harm would come from the ratcheting down of the so-called safe harbor rate discussed above - but that wouldn’t even start until 2027 (notably after the midterm election 🙄) and settling upon a final rate in 2032. If it actually goes through the entire process, the results would be devastating - but I’m half-convinced many of the “yes” votes were made with the assumption that someone more responsible would come along and fix it before it’s too late. With Blue Wave elections in ‘26 and - vitally - ‘28, it might be possible. Otherwise, rural hospitals really might be in major trouble (conveniently after many of the people responsible are no longer around to face the consequences).
Bret--I'm a nobody as well. and certainly no expert, but here are some thoughts. First, I agree with you that in 2026 the changes in this bill will not yet affect many people. The extension of the tax cuts simply keeps the status quo so voters won’t see any changes in their taxes. The Medicaid cuts don’t begin until 2027—after the Midterm. I do think that it is possible that we will start to see rural hospitals affected by the Bill before 2026. While the Medicaid cuts don’t take effect until 2027, both States (who will need to adjust their Medicaid budgets because of reduced provider taxes) and Hospitals (who will be facing severe financial loss in 2027) may well take action before 2027. This is because they will need to take action now to avoid disaster in the future. Given the magnitude of this impact, we would expect hospital and community centers to make changes now—and not wait until 2027. Indeed, one hospital in rural Nebraska has already announced that it will close its doors due to anticipated federal budget cuts to Medicaid.
Chuck:
Well done! I was not following these impacts. Eye opening.
Joe