Hospitals one of the biggest losers from Medicaid cuts, state treasurers say

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Democratic state treasurers of four states warned of the consequences of Republican-proposed Medicaid cuts, not just to their budgets and state beneficiaries but to hospitals.

Most people who would lose Medicaid coverage would not get other health insurance due to the cost, such as through plans available on the Affordable Care Act marketplace, they said.

Without Medicaid, most would have no insurance at all, said Oregon State Treasurer Elizabeth Steiner. 

This would lead to more uncompensated care, which is troubling, especially for financially struggling rural hospitals, the treasurers said.

In 2022, the American Hospital Association reported that between 2010 and 2021, 136 rural hospitals closed around the country. In 2024, Time reported that nearly a third of rural hospitals were at risk of closure.

Patients in rural areas are already driving hours to access care, they said.

“We’ve seen closures, particularly in maternity care,” Steiner said. “The hospitals that are already struggling will lose funding.”

Steiner is also a practicing physician. She treated a man in his 40s who had a heart murmur that would likely have led to sudden cardiac death if he hadn’t sought care, she said. His health insurance was through Medicaid. The man worked as a cab driver and had a family with five children. If he didn’t have health insurance, he likely wouldn’t have sought care, she said.

Most people on Medicaid work, she said.

The state treasurers from Oregon, Colorado, New Mexico and Delaware said they rely heavily on federal funding for Medicaid. If the federal cuts go through, states would need to take money from other parts of the budget to fund Medicaid, they said.

New Mexico is the largest Medicaid-funded state in the country, said New Mexico Treasurer Laura M. Montoya. Most of the state is rural. Tribal communities would lack access to care, she said.

In Oregon, Medicaid services one in three people. Fifty-seven percent of children are covered by Medicaid as well as two out of every three nursing home residents, according to Steiner. Oregon would lose $3 billion if the Medicaid budget cuts go through

In Colorado, about a third of the budget is dedicated to Medicaid, said State Treasurer David L. Young. If the cuts go through, they would have to slash other programs to support Medicaid.

Delaware Treasurer Colleen C. Davis said treatment for pre-existing conditions would be at risk.

All said the funding cuts were to create tax cuts for the nation’s wealthier citizens.

WHY THIS MATTERS

Republicans have proposed $880 billion in spending cuts over the next 10 years from programs overseen by the House Committee on Energy and Commerce.

The Congressional Budget Office said earlier this month that Medicaid accounts for 93% of the total programs, leading to the conclusion that cuts can’t be made without slashing Medicaid.

The spending bill that passed as a Continuing Resolution this month did not immediately make cuts to Medicaid. The CR averted a government shutdown and will expire at the end of September.

THE LARGER TREND

There are several options under consideration in Congress to significantly reduce federal Medicaid spending to help pay for tax cuts, according to KFF. There are not yet detailed proposals under consideration by Congress to achieve federal Medicaid spending reductions. The recently passed House budget resolution targets cuts to Medicaid of up to $880 billion or more over a decade.

Email the writer: SMorse@himss.org