Rural Trump Country Faces Severe Fallout — Threatening the U.S. Economy

2026-02-16 16:12:18

The public health provisions in the massive spending package that President Donald Trump
signed into law on July 4, 2025
, will reduce Medicaid spending
by more than US$1 trillion
over a decade and result in an estimated 11.8 million people
losing health insurance coverage
.

As researchers studying
rural health
and
health policy
, we anticipate that these reductions in Medicaid spending, along with changes to the Affordable Care Act, will disproportionately affect the
66 million people
living in rural America – nearly 1 in 5 Americans.

People who live in rural areas are more likely to
have health insurance through Medicaid
and are at greater risk of
losing that coverage
. We expect that the changes brought about by this new law will lead to a rise in unpaid care that hospitals will have to provide. As a result, small, local hospitals will have to make tough decisions that include changing or eliminating services, laying off staff and delaying the purchase of new equipment. Many rural hospitals will have to reduce their services or possibly
close their doors altogether
.

Hits to rural health

The budget legislation’s biggest effect on rural America comes from changes to the Medicaid program, which represent
the largest federal rollback
of health insurance coverage in the U.S. to date.

First, the legislation changes how states can
finance their share of the Medicaid program
by restricting where funds states use to support their Medicaid programs can come from. This bill limits how states can tax and charge fees to hospitals, managed care organizations and other health care providers, and how they can use such taxes and fees in the future to pay higher rates to providers under Medicaid. These limitations will
reduce payments to rural hospitals
that depend upon Medicaid to keep their doors open.

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Second, by 2027, states must institute work requirements that
demand most Medicaid enrollees
work 80 hours per month or be in school at least half time.
Arkansas’ brief experiment with work requirements
in 2018 demonstrates that rather than boost employment, the policy increases bureaucracy, hindering
access to health care benefits
for eligible people. States will also now be required to verify Medicaid eligibility every six months versus annually. That change also increases the risk people will lose coverage due to extra red tape.

The Congressional Budget Office estimates that work requirements instituted through this legislative package will result in
nearly 5 million people
losing Medicaid coverage. This will decrease the number of paying patients at rural hospitals and increase the unpaid care hospitals must provide, further damaging their ability to stay open.

Additionally, the bill changes how people qualify for the
premium tax credits
within the Affordable Care Act Marketplace. The Congressional Budget Office estimates that this change, along with other changes to the ACA such as fewer and shorter enrollment periods and additional requirements for documenting income, will reduce the number of people insured through the ACA Marketplace
by about 3 million
by 2034. Premium tax credits were expanded during the COVID-19 pandemic, helping millions of Americans obtain coverage who previously struggled to do so. This bill lets these expanded tax credits expire, which with may result in
an additional 4.2 million people becoming uninsured
.

An insufficient stop-gap

Senators from both sides of the aisle have voiced concerns about the legislative package’s potential effects on the financial stability of rural hospitals and frontier hospitals, which are facilities located in remote areas with fewer than six people per square mile. As a result, the Senate
voted to set aside $50 billion
over the next five years for a newly created
Rural Health Transformation Program
.

These funds are to be allocated in two ways. Half will be directly distributed equally to states that submit an application that
includes a rural health transformation plan
detailing how rural hospitals will improve the delivery and quality of health care. The remainder will be distributed to states in varying amounts through a process that is currently unknown.

While additional funding to support rural health facilities is welcome, how it is distributed and how much is available will be critical. Estimates suggest that rural areas will see a reduction of
$155 billion in federal spending
over 10 years, with much of that concentrated in 12 states that expanded Medicaid under the Affordable Care Act and have large proportions of rural residents.

That means $50 billion is not enough to offset cuts to Medicaid and other programs that will reduce funds flowing to rural health facilities.

Accelerating hospital closures

Rural and frontier hospitals have long faced hardship because of their aging infrastructure, older and sicker patient populations, geographic isolation and greater financial and regulatory burdens. Since 2010, 153 rural hospitals have
closed their doors
permanently or ceased providing inpatient services. This trend is particularly acute in states that have chosen not to expand Medicaid via the Affordable Care Act, many of which have larger percentages of their residents living in rural areas.

According to an
analysis by University of North Carolina researchers
, as of June 2025
338 hospitals are at risk
of
reducing vital services
, such as skilled nursing facilities; converting to an alternative type of health care facility, such as a
rural emergency hospital
; or closing altogether.

Maternity care is especially at risk.

Currently more than
half of rural hospitals
no longer deliver babies. Rural facilities serve fewer patients than those in more densely populated areas. They also have
high fixed costs
, and because they serve a high percentage of Medicaid patients, they rely on payments from Medicaid, which tends to pay lower rates than commercial insurance. Because of these pressures, these units will continue to close, forcing women to travel farther to give birth, to deliver before going full term and to deliver
outside of traditional hospital settings
.

And because hospitals in rural areas serve relatively small populations, they
lack negotiating power
to obtain fair and adequate payment from private health insurers and affordable equipment and supplies from medical companies. Recruiting and retaining needed physicians and other health care workers is expensive, and acquiring capital to renovate, expand or build new facilities is increasingly out of reach.

Finally, given that rural residents are more likely to have Medicaid than their urban counterparts, the legislation’s cuts to Medicaid will disproportionately reduce the rate at which rural providers and health facilities are paid by Medicaid for services they offer. With many rural hospitals already
teetering on closure
, this will place already financially fragile hospitals on an accelerated path toward demise.

Far-reaching effects

Rural hospitals are not just sources of local health care. They are also
vital economic engines
.

Hospital closures result in the loss of local access to health care, causing residents to choose between
traveling longer distances
to see a doctor or forgoing the services they need.

But hospitals in these regions are also major employers that often pay some of the highest wages in their communities. Their closure can drive a
decline in the local tax base
, limiting
funding available for services
such as roads and public schools and making it more difficult to attract and retain businesses that small towns depend on. Declines in rural health care
undermine local economies
.

Furthermore, the country as a whole relies on rural America for the production of food, fuel and other natural resources. In our view, further weakening rural hospitals may affect not just local economies but the health of the whole U.S. economy.

Lauren S. Hughes
, State Policy Director, Farley Health Policy Center; Associate Professor of Family Medicine,

University of Colorado Anschutz Medical Campus

and
Kevin J. Bennett
, Professor of Family and Preventive Medicine,

University of South Carolina

This article is republished from
The Conversation
under a Creative Commons license. Read the
original article
.

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