Ag Policy Blog

U.S. senators have concluded the "One Big Beautiful Bill" could force more rural hospitals to close and they are looking for emergency fix as they try to complete the bill.

After the Senate Finance Committee released its tax provisions for the massive budget reconciliation package, groups such as the National Rural Health Association (NRHA) sounded the alarm.

The health care issue is just one sticking point in the legislation as Senate Republicans try to find a way to bring the budget reconciliation bill to the floor next week. The Senate looks to pass the bill before July 4, but President Donald Trump and his team want to see the bill sent to the president's desk by that Independence Day deadline. That appears unlikely given divisions among Republicans and differences between the House and Senate versions.

Beyond tightening work requirements for Medicaid recipients, the Senate Finance Committee's proposed changes to Medicaid include a provision from the House bill that would restrict state-directed payments and provider taxes to health care facilities. For states that have expanded Medicaid, the bill would cap those taxes at 3.5%, down from the current level of 6%.

Rural hospitals operate on smaller operating margins than urban hospitals, the Kaiser Family Foundation (KFF) reported earlier this year. Urban hospitals may run a 5.4% operating margin, while rural hospitals run somewhere between 1.7% to 3.7%.

Over a 20-year stretch, from 2005 to 2024, KFF cited 193 rural hospitals closed nationwide. From 2017 to 2023, the total was 61 rural hospital closures compared to ten rural hospitals opening over that time.

Medicare and Medicaid combined take up roughly 66% of a rural hospital's payments, KFF noted. Further, Medicaid covers more than 40% of child births nationwide.

NRHA said the combined effect of restricting state funding and tightening coverage "will inevitably impact health care access and outcomes in rural communities across the nation. Rural patients will pay more in the long term because they cannot afford preventive care without Medicaid coverage, thus ultimately driving up costs to the larger rural health care system through increased emergency department use and uncompensated care."

NRHA noted Medicaid is critical for rural communities. In many cases, Medicaid keeps rural clinics, hospitals and long-term care facilities operating.

"Rural areas will suffer if these policies are enacted as rural residents rely upon Medicaid for health care coverage more than their urban counterparts, and public payers, including Medicaid, comprise a larger share of rural hospital services. Drastic cuts, such as those proposed by the Senate Finance Committee, will force many rural facilities to reduce or cut service lines or close their doors entirely, impacting access to care for everyone who lives in the rural community," NRHA stated.

Medicaid cuts were already a sticking point for some GOP senators such as Sen. Josh Hawley, R-Missouri, and Sen. Lisa Murkowski, R-Alaska. Sen. Jim Justice, R-W. Va., also has expressed reservations about the risks to rural hospitals.

Rather than strip some of those funding restrictions from the bill, the Senate is looking for an option that would protect rural hospitals from closing. According to CQ Roll Call, Republican senators have pitched the idea of a "rainy-day fund" to help support rural hospitals and teaching hospitals.

At the same time, there are others in the GOP caucus who don't back the budget bill because they don't believe it makes enough cuts to federal spending.

Senate Democrats, meanwhile, are pressing Republicans to remove provisions in the bill that would cut health insurance and cut the Supplemental Nutrition Assistance Program (SNAP). Every Senate Democrat joined a letter Friday against the cuts. They cited, among other things, the bill would "shutter rural hospitals and nursing homes."

Also see, "Senate Tax Package Would Allow Foreign Feedstocks to Qualify for 80% of 45Z Tax Credit," https://www.dtnpf.com/…

"Senate Ag Reconciliation Bill Offers Farmers Better Options for 2025 Programs," https://www.dtnpf.com/…

Chris Clayton can be reached at Chris.Clayton@dtn.com

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