A sign at the entrance for Mahaska Health, a hospital in Oskaloosa, Iowa, that has received funding from the U.S. Department of Agriculture. (Photo by Cecilia Lynch/USDA). 

WASHINGTON — Americans living in rural communities throughout the country could see their access to health care diminish if Congress changes eligibility for Medicaid or significantly reduces its federal funding.

While rural residents who depend on the state-federal program for lower income people would experience the most substantial impacts, those who have private health insurance or have other coverage, like Medicare, would likely encounter changes as well.

Rural hospitals and primary care physicians’ incomes would likely go down if Medicaid patients are no longer able to afford the same level of health care, potentially leading to reductions in services offered for everyone or even closures, according to experts.

Whitney Zahnd, assistant professor in the Department of Health Management and Policy at the University of Iowa, said that cuts to Medicaid “will disproportionately hit rural communities,” where 24% of people are covered by the program, including 47% of all births and a majority of nursing home patients.

“This is something that’s going to impact them more than those in urban areas and that’s on top of the already lower access to care, higher need for care, older populations,” Zahnd said. “It’s just going to make things that are already a challenge even more challenging for rural communities.”

The Federal Office of Rural Health Policy categorizes about 20.3% of Americans, or 62.8 million people, as living in rural areas, based on 2020 Census data.

Hospital closings in rural America

Rural areas have seen hospitals close their doors at higher rates than facilities in non-rural areas and that trend doesn’t appear likely to reverse any time soon.

The Cecil G. Sheps Center for Health Services Research at University of North Carolina at Chapel Hill has an interactive map showing where 87 rural hospitals have closed completely since 2010, while an additional 65 “no longer provide in-patient services, but continue to provide some health care services.”

And a report from the Center for Healthcare Quality and Payment Reform released in February shows that more “than 700 rural hospitals — one-third of all rural hospitals in the country — are at risk of closing because of the serious financial problems they are experiencing.”

Losing income from Medicaid patients could lead to a “domino effect,” Zahnd said, exacerbating budget challenges for rural health care providers and potentially communities overall.

“Economically in a lot of rural communities, the hospital is the largest employer,” Zahnd said. “So if you have a hospital close, it’s not just that people are losing access to health care, they might be losing their job or their family member may be losing their job.”

Rural health care providers that are able to stay open might have to cut the services they offer to keep their accounts from going too far into the red. Such a decision wouldn’t just harm Medicaid patients, but anyone living in a rural community who goes to that doctor or hospital.  

“So those are some risks we would anticipate if there are these big cuts to Medicaid,” Zahnd said.

Winners and losers

Timothy McBride, co-director of the Center for Health Economics and Policy at the Institute for Public Health at Washington University in St. Louis, Missouri, said during a briefing on Medicaid in mid-March that financial margins for rural hospitals are “razor-thin.”

“Even in the urban hospitals, they’re probably just a few percentage points, but in rural hospitals, they can be just a percentage point or 2 or negative,” McBride said. “So if you take away the Medicaid dollars, they’re certainly going to go negative. And if you wonder why rural hospitals close, that’s why.”

McBride also made the point during a March 13 briefing hosted by SciLine, a service for journalists and scientists based at the American Association for the Advancement of Science, that Medicaid provides funding for a lot of rural health care providers.

“In an economic system, if we cut the spending, we can go, ‘Oh, that’s great. We cut $880 billion.’ But whose income is that? It’s income to hospitals, it’s income to doctors,” McBride said. “And that’s going to, you know, be really hard on rural systems and on rural hospitals and urban systems.

“Yeah, it’s going to help the taxpayers, but, you know, just be mindful of who is going to be hurt. There’s winners and losers here.”

Budget process

Republicans in Congress are planning to use the complicated budget reconciliation process to extend the 2017 tax cuts they enacted during President Donald Trump’s first term to the tune of about $4.5 trillion in new deficits. They also want to boost spending on defense and border security by hundreds of billions of dollars and rewrite energy policy.

In order to pay for some of the package, the House’s budget resolution instructs the committee that oversees Medicaid to cut $880 billion in spending during the next decade — the figure cited by McBride.

Republicans in the Senate haven’t yet agreed to that outline, with several expressing concerns about how steep cuts to federal funding would affect their constituents.

Census data shows that more than 85% of the United States remains rural, meaning every one of the 53 Republican senators represents a state with at least some rural areas.

The Senate in the weeks ahead is expected to debate the budget resolution the House voted along party lines to approve in February. Senators are likely to make changes and send it back across the Capitol for the House to give final approval.

Once the two chambers vote to adopt the same budget resolution with identical reconciliation instructions, Congress can formally begin advancing legislation that could restructure Medicaid. But the GOP will need to stay united throughout the process.

Republicans hold a paper-thin majority in the House of Representatives, requiring that any proposed changes to Medicaid garner the support of centrist and far-right GOP lawmakers.

Even a few defections over Medicaid changes, or other elements in the bill, would stop the package from becoming law.

Avoiding high medical costs, bankruptcy

Joan Alker, executive director of the Georgetown University Center for Children and Families, said that in addition to being “a critical backbone to our healthcare system,” Medicaid helps prevent lower-income Americans from going into medical debt and reduces the number of people landing in emergency departments for conditions that can be managed by primary care providers.

“We spend a lot of time, of course, rightly, thinking about Medicaid and the question of access. But fundamentally, Medicaid is an economic support — a critical piece of the puzzle for families who are struggling to pay bills with the high cost of housing and food,” Alker said. “And so that’s the number one most important thing: If you are uninsured in this country, unless you are a billionaire, you are going to be exposed to high medical costs, and those can lead to debt, and even bankruptcy.”

When people lose access to health insurance or programs like Medicaid, they tend to delay or avoid going to primary care providers, who can diagnose issues early and help patients manage chronic conditions.

“That’s not the way we want our health system to work,” Alker said. “Their condition will have worsened. They won’t have had access to prescription drugs that they needed to address chronic conditions, like asthma or diabetes or hypertension. And so they get worse and show up in the emergency room.”

Medicaid also covers health care for about half of the children in the United States and more than 40% of the births, making the program a significant source of income for both pediatricians and OBGYNs. They would see their budgets decreased if patients lose access to the program.

“There are already challenges, and these kinds of cuts will really exacerbate those for families living in these communities, whether they’re enrolled in Medicaid or not,” Alker said.

Entire community affected

Megan Cole, associate professor in the Department of Health Law, Policy and Management at Boston University School of Public Health, said during the SciLine briefing that if Congress cuts Medicaid, it would have wide-ranging effects on rural health care. 

“I think these cuts will have impacts not just on Medicaid recipients but on whole economies and health systems; so particularly safety net health systems, community health centers, rural hospitals,” Cole said. “As those institutions have less patient revenue. They may face reductions in services. They may close certain sites depending on finances. They may eliminate staff. So that affects not just the Medicaid enrollees, but also affects anyone who is otherwise served by those providers.”

A sign for the Oneida Community Health Center in Hobart, Wis. | Photo by Jason Kerzinski for Wisconsin Examiner

Wisconsin state Sen. Eric Wimberger (R-Oconto) and Rep. Joy Goeben (R-Hobart) heard concerns about potential Medicaid cuts and gambling at a listening session Monday in Oneida, Wis. 

A woman at the session said her son receives Medicaid through the Katie Beckett program, which serves children under 19 who live at home and have certain health care needs. She said that “with the $880 billion that is going to be reduced in the federal budget, it is without a doubt going to impact Medicaid in our state.” 

A budget proposal approved by the House in late February requires lawmakers to cut spending to offset tax breaks, likely requiring Medicaid cuts, KFF Health News reported. The committee that oversees spending on Medicaid and Medicare is instructed to cut $880 billion over the next decade.

The Congressional Budget Office found House Republicans’ budget goals would require cuts to Medicaid, CBS News reported on March 6. 

The woman said she’s wondering what’s happening in the state budget to “plan for these shortcomings that are going to be coming from the federal level.” 

“I don’t know on the federal side, what’s going on there,” Wimberger said. “…I can’t imagine that we’d let any sort of tragedy happen to people who—if there’s a cut of any kind, so we’ll have to adjust to it.”

Medicaid is funded by both federal and state governments. Proposals that would reduce the amount of money paid by the federal government would not require states to pay more to make up the difference, and most states will not likely increase their health care spending, according to an opinion article by the president of the health policy research and news outlet KFF.  

Wimberger is a member of the state Legislature’s Joint Committee on Finance, which is responsible for reviewing state appropriations and revenues. The committee will hold listening sessions on April 2 in Kaukauna, April 4 in West Allis, April 28 in Hayward and April 29 in Wausau.

Oneida Nation requests anti-gambling efforts, grant funding

Brandon Stevens, the vice-chairman of the Oneida Nation in northeast Wisconsin, spoke at the listening session. One topic discussed was online and in-person gambling. 

In Wisconsin, tribes have the exclusive right to operate Class III games, through compacts with the state. Class III includes banking card games, electronic games of chance, including slot machines and, generally, high-stakes, casino-style games. 

Tana Aguirre from the Oneida Nation’s intergovernmental affairs and communications office sent the Examiner a statement that covers a few of the tribe’s budget priorities. 

The Oneida Nation is requesting an increase in funding to help address illegal/unregulated gambling activities, according to Aguirre. The tribe requests compliance and/or enforcement measures “to help deal with illegal gambling machines and practices throughout Wisconsin.” 

“We’re paying a premium for exclusivity through the gaming compact [between the tribe and the state]. It’s basically a violation of the compact if they’re allowed to game at a particular level,” Stevens said. 

Aguirre said the Oneida Nation and other tribes want to see increased funding for a tribal elderly transportation grant program. The grant gives the state’s 11 federally recognized tribes financial assistance for transportation services for tribal elders on and off the reservation. 

The Oneida Nation also wants funding to go toward an intergovernmental training program, Aguirre said. 

The program “is meant to enhance the skill set and understanding between state and tribal officials.” It aims to promote the different governments engaging in “meaningful and productive” consultations and discussions. 

Aguirre said that for the items included in his email, the tribe is requesting that funding come from Oneida Nation gaming revenue that the state of Wisconsin receives.

Tribes submit gaming-related payments to the state. A variety of state programs receive state funding from tribal payments, such as gaming regulation in the Department of Administration and law enforcement in the Department of Justice. Gaming revenue has been put toward tribal family services grants, a tribal law enforcement grant program and other programs. 

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As Congress considers cuts to Medicaid, advocates warn that proposals will hike state costs or reduce services for people with no other resources. (Getty Images)

Of the laundry list of proposed Medicaid cuts circulating on Capitol Hill, policy watchers say some stand out as the most likely to be implemented because they’ve either been tried before, frequently embraced, or both.

Advocates argue that none of the ideas will actually help the program do a better job of its central mission: make it possible for poor and low-income people to get either primary or long-term health care. Instead, they contend, the outcome would be to transfer the costs to states unwilling to cut services or kick people off the rolls who have no other health care resources.

Broad outlines of the proposed Medicaid wish list for Congressional Republicans were outlined in a U.S. House memo that Politico published in mid-January, along with 50 pages of details. The memo is the basis for a summary of those proposed cuts from policy analysts and advocates at the Georgetown University Center for Children and Families.

Among the proposals that have garnered the most attention and concern are:

• Instituting work requirements for Medicaid recipients.
• Capping the current federal contribution to a state’s Medicaid budget, also known as turning Medicaid funds into a state block grant.
• Lowering the federal government’s minimum share of the cost of Medicaid, currently 50%.
• Ending the increased federal government match for states that have adopted Medicaid expansion under the Affordable Care Act (ACA)

Additional proposals would make other changes to how the federal matching rate is calculated or applied and reverse several Biden administration rules that made Medicaid enrollment easier and broadened access to benefits, according to the Georgetown summary.

Medicaid is funded by a combination of federal and state money. Proposals that lower the federal share would require states to pick up a larger share of the cost to avoid reducing coverage.

“The scale of the cuts Congress is contemplating is so large it really will cause fiscal peril for the state,” says Tamara Jackson of the Wisconsin Board for People with Developmental Disabilities.

Medicaid work requirements

The congressional proposals include imposing work requirements for “able-bodied” people as a condition of receiving Medicaid.

The congressional memo specifies that work requirements would not include “pregnant women, primary caregivers of dependents, individuals with disabilities or health-related barriers to employment, and full-time students.” It pegs the savings from a work requirement at $100 billion over 10 years.

According to KFF, a nonpartisan, nonprofit health policy research organization, however, more than two-thirds of Medicaid recipients are working, and those who aren’t would largely fall into the groups the memo says would be exempt.

The first Trump administration approved state Medicaid program waivers that included work requirements, while the Biden administration withdrew its approval. Among them was a requirement in Wisconsin dating from the administration of former Gov. Scott Walker.

The GOP majority in the Wisconsin Legislature passed a bill in 2022 that included a Medicaid work-requirement variation, but it was vetoed by Gov. Tony Evers.

According to KFF, a Congressional Budget Office analysis of a 2023 U.S. House proposal to institute Medicaid work requirements found that while it would save the federal government $109 billion, it would also increase the number of uninsured people by 600,000 without increasing employment. An Arkansas work requirement instituted in 2018 but later found unlawful by a federal court led 18,000 people to lose coverage.

“What we know is, even though people are working or would be technically subject to exemptions, there are very significant administrative burdens on enrollees to prove that or be found ineligible,” says Richelle Andrae, associate director of government relations for the Wisconsin Primary Health Care Association. The organization represents federally qualified health centers that serve low-income patients, including those on BadgerCare Plus and those who are uninsured.

“More time-sensitive paperwork and steps that are hard for people to understand or do and lots of people trying to complete administrative tasks at the same time are a recipe for mistakes, by individuals and government agencies that must do the work,” says Jackson. “That is how policies like work requirements and more frequent eligibility checks save money. Eligible people lose coverage or struggle to get in.”

Block grants

Currently Medicaid pays states at least 50% of all Medicaid costs, with states paying the balance.

In President Donald Trump’s first term, his administration attempted to replace that long-standing guarantee with a block grant — a fixed amount of money per Medicaid beneficiary in the state, regardless of the actual cost.

That per-patient cap on federal funds “would instead radically restructure Medicaid financing,” according to the Georgetown summary.

The cost would be felt across the board, from long-term care in nursing homes or in the community home care to primary health care through BadgerCare Plus, health care providers say, to the detriment of patients.

“Whatever the proposals are that are at the federal level — changing the formula, [per-patient] caps, at the end of the day they they’re all aimed at reducing funding for the Medicaid program, and it really is a vital lifeline for long-term care services and support,” says Lisa Davison, executive director of LeadingAge Wisconsin. The organization represents nursing homes and assisted living providers in the nonprofit, publicly owned and for profit sectors.

Reducing support would send some patients who now have Medicaid coverage back into the pool of uninsured people, says Patricia Sarvela, chief development officer for Partnership Community Health Center, a federally qualified health center in the Fox Valley that serves uninsured people as well as BadgerCare recipients.

Lacking health insurance, people are likely to put off addressing symptoms until their condition worsens enough for them to go to the emergency room, Sarvela says.

Directly or indirectly, taxpayers will likely wind up having to cover the cost of that care, however. “There might be short-term federal savings but ultimately at the end of the day it’s going to cost the taxpayers a lot more because patients will then not have health insurance,” Sarvela says.

Changes to federal match

Several proposed changes relate to the amount of the federal Medicaid match or how it’s calculated.

A proposal published by the Paragon Institute in July 2024 calls for reducing the federal match below 50% of the costs. The Paragon Institute has close ties to the Heritage Foundation, which produced Project 2025, the 900-page document that, although disavowed by Trump last year, has been echoed in numerous actions since he took office.

In 10 states the federal match is at the minimum and would likely be lowered, the Georgetown summary says, adding: “These states would likely have to make deep cuts to their Medicaid programs in response.”

The states are California, Colorado, Connecticut, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Washington and Wyoming.

Other states receive a higher federal match; Wisconsin gets 60% of its costs covered. It’s not clear whether those states’ matches would also be reduced under the proposal or other Medicaid reduction proposals.

Medicaid expansion

Another likely cut would be to reduce the additional federal match for Medicaid recipients whose incomes are between 100% and 138% of the federal poverty line.

The additional match was included in the Affordable Care Act, enacted in 2010. Originally Medicaid expansion was mandatory under the act, but a subsequent U.S. Supreme Court ruling that upheld the ACA made Medicaid expansion voluntary.

States that have accepted the expansion got a 90% federal match for the added beneficiaries. The Congressional memo proposes ending the higher match, and some states that have expanded are already considering ending expansion if that happens.

Wisconsin never accepted Medicaid expansion, however, so that change would not directly affect the state. Although Evers first ran in 2018 on a vow to accept Medicaid expansion after Walker rejected it, he’s been blocked from doing so by the GOP majority in the Legislature.

As he has with every budget he’s proposed since taking office, Evers has included accepting Medicaid expansion in his 2025-27 budget proposal.

In an interview with the Wisconsin Examiner last month after a visit with constituents in Port Washington to promote his budget, Evers said he didn’t consider leaving out Medicaid expansion, despite predictions that it would be pulled back by Republicans.

“First of all, we don’t know if it’s going to go away,” Evers said. Under the current 90% match, he said, Wisconsin would get about $2 billion in additional federal money every two years and the additional people covered in the state “would get better health insurance, so it’s a win-win-win.”

Evers acknowledged that in the current Congress, there’s a risk for sharp reductions in Medicaid.

If that happens, “it would be disastrous,” Evers said. “We have lots of people on Medicaid in the state of Wisconsin.”

Among states, Wisconsin’s Medicaid profile is “pretty average,” he added.

“There are places in the country where Medicaid is a huge, huge player, and if they would get rid of Medicaid, our health care system would implode. There’s just no question about that. That’s the thing that concerns me.”

This story is Part Three in a series.

Read Part One: Wisconsin patients, families are wary as Congress prepares for Medicaid surgery

Read Part Two: How Medicaid fuels an economic engine for caregivers, family members and patients

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