Rural hospitals face crisis under OBBBA as experts call for cohesive reform

Editor's Note

The One Big Beautiful Bill Act (OBBBA) is set to reshape rural healthcare in ways that could destabilize already fragile systems. According to a September 3 JAMA Network article, the law is set to reduce federal Medicaid spending by more than $900 billion over 10 years, cuts that disproportionately affect rural communities where 24% of residents rely on Medicaid. These reductions will likely force states to restrict eligibility, lower provider payments, and shift costs to patients. Rural hospitals, which already operate on thin margins, are particularly vulnerable. Since 2010, 153 rural hospitals have closed or discontinued inpatient services, and more than 400 remain at risk. Analysts estimate that OBBBA’s $50 billion Rural Health Transformation Program will cover less than half of projected losses, raising the prospect of further closures of maternity, behavioral health, and emergency services.

The same article warns that workforce shortages will intensify as declining reimbursements and uncompensated care force hospitals to cut positions and scale back clinical training programs. This contraction could diminish the pipeline of rural-trained professionals, worsening access to care. Medicaid eligibility changes, including new work requirements and more frequent redeterminations, are expected to strip coverage from nearly 2 million rural residents, further disrupting primary, specialty, and behavioral health services. Cuts to Affordable Care Act marketplace subsidies will also drive up insurance costs, with 4.2 million more people projected to lose coverage. The ripple effects extend beyond healthcare, as rural hospitals are often major employers and community anchors, meaning closures will erode local economies and tax bases.

A companion JAMA article, also published September 3, argues that rural hospitals deserve more than piecemeal fixes and calls for a unified, modern framework. The authors note that for decades, rural hospitals have been propped up by a patchwork of federal designations and programs such as critical access and sole community hospital status. Yet these fragmented supports impose administrative burdens, create funding inequities, and fail to address structural instability. OBBBA’s rural funding provision, they caution, is another patchwork solution—its uneven distribution, diluted targeting, and lack of oversight are unlikely to deliver meaningful long-term relief.

Instead, experts propose reforms that include a streamlined rural hospital designation, more predictable payment models such as global budgets or population-based capitation, reduced reporting requirements, and better integration of emergency transport and referral systems. Such measures, they argue, would strengthen both financial stability and care delivery. With more than 300 rural hospitals teetering on closure, the article stresses that incremental policy adjustments are no longer sufficient. Sustaining rural healthcare requires comprehensive restructuring that reflects the realities of low-volume care and supports communities that depend on these facilities.