Impact of Trump's Spending Package on Rural Hospitals and Healthcare Access

The recent signing of a sweeping federal spending package by President Donald Trump on July 4, 2025, is set to significantly impact rural healthcare facilities across the United States. One of the most pressing concerns is the reduction in Medicaid funding, which is projected to decrease by over US$1 trillion over the next decade. This financial cut is expected to result in approximately 11.8 million Americans losing their health insurance coverage, disproportionately affecting rural populations who rely heavily on Medicaid.

Researchers specializing in rural health and health policy warn that these reductions, alongside modifications to the Affordable Care Act, will exacerbate existing challenges faced by rural hospitals. Many of these facilities are already financially fragile due to high fixed costs, serving smaller patient populations, and operating with low reimbursement rates from Medicaid—a vital source of income for these institutions.

The legislative changes include restrictions on how states can fund Medicaid through taxes and fees on hospitals and healthcare organizations. Furthermore, by 2027, states are mandated to implement work requirements for most Medicaid enrollees, demanding at least 80 hours of work or school attendance per month or risk losing coverage. Such policies, based on limited evidence of effectiveness, are expected to increase administrative burdens and reduce access to necessary health services.

Estimates from the Congressional Budget Office suggest that nearly 5 million individuals will lose Medicaid coverage due to these work requirements, further decreasing patient inflow to rural hospitals and increasing unpaid care. Additionally, reforms to the ACA will phase out expanded premium tax credits, potentially leaving about 4.2 million more Americans uninsured by 2034.

While some bipartisan efforts have resulted in a $50 billion fund aimed at supporting rural hospitals through the Rural Health Transformation Program, experts argue that this amount is insufficient to counteract the extensive Medicaid cuts, especially in states that did not expand Medicaid under the ACA. Many rural hospitals are already at risk of closing due to aging infrastructure, high costs, and recruitment difficulties, with over 150 having closed since 2010.

The threat extends beyond healthcare access—rural hospitals are vital economic engines for their communities, providing employment and essential services. Their closures can lead to decreased local tax revenues, limited funding for infrastructure and public services, and broader economic decline, which in turn can impact food production, energy, and natural resource industries critical to the national economy.

In summary, the new federal legislation poses substantial risks to the sustainability of rural healthcare infrastructure, risking more hospital closures, diminished care options, and worsening health disparities among underserved rural populations.