President Donald Trump’s new tax and spending law will cap Medicaid payments to doctors and hospitals in over half the states, potentially reducing reimbursements by 10 percentage points annually starting in 2028. Critics warn this will strain rural hospitals already struggling financially, risking service closures like obstetrics and chemotherapy. Medicaid often covers only two-thirds of care costs, so extra state-directed payments have been vital for provider sustainability. The law aims to cut $149 billion from Medicaid over ten years, sparking concern among health groups. Some states, like Kansas and Mississippi, seek funds from a new Rural Health Transformation Program to offset losses, but uncertainties remain.
President Donald Trump’s new tax and spending law will likely force more than half the states to reduce payments to doctors and hospitals that treat Medicaid patients, a change critics warn will be particularly harmful to rural hospitals struggling to stay afloat.
Medicaid, the joint state-federal health insurance program for low-income people, reimburses doctors, hospitals and nursing facilities for treating enrollees. But in many cases, the program doesn’t fully cover the cost of care, straining providers that serve a large share of Medicaid patients.
To help providers cover losses and continue to serve poorer populations, the federal government allows the 41 states, plus the District of Columbia, that have contracted with Medicaid managed care organizations (MCOs) to run their Medicaid programs to direct them to pay providers more — in some cases, as much as commercial plans
Ultimately, taxpayers cover the costs of these so-called state directed payments — and those costs are growing. As of August 2024, the higher payments were projected to add $110.2 billion per year to Medicaid spending, nearly 60% more than the previous year’s projection.
That higher spending attracted the attention of conservatives on Capitol Hill.
Beginning in 2028, the One Big Beautiful Bill Act will cap the payments, forcing state Medicaid programs to reduce reimbursement rates by 10 percentage points each year until they reach either 100% or 110% of what Medicare pays. States that expanded Medicaid under the Affordable Care Act would be capped at the lower rate.
The new law will reduce Medicaid spending by $149 billion over the next decade, according to the Congressional Budget Office, and reduce Medicaid provider payments in as many as 31 states, according to KFF, a health policy research group. A separate analysis by The Commonwealth Fund, another research group, found that Medicaid payments to hospitals would drop by at least 20% in 19 of the 25 states that had publicly available data.
Critics say the change could be disastrous for hospitals, many of them in rural areas, that see a large share of Medicaid patients.
“This is all on top of an already pretty strained financial situation for rural hospitals,” Alexa McKinley Abel, director of government affairs and policy at the National Rural Health Association, a group representing rural health care providers, said in an interview. “We are worried about seeing service line closures at hospitals in an environment where OB-GYN and chemotherapy service lines are already being cut.”
Covering the cost of care
Supporters of the change say the extra payments inflate federal spending on the Medicaid program, giving hospitals “windfall profits.”
“Not only do these programs sidestep the truly needy on Medicaid and favor special interests instead, but all this is financed by growing the federal debt, leading to inflation and higher interest rates for all Americans,” the Paragon Health Institute, a conservative think tank that helped draft the bill, stated in a policy brief.
Hospital leaders dispute that. Earlier this year, the American Hospital Association asserted that without the extra payments, Medicaid managed care organizations in 2023 only covered about two-thirds of the actual cost of care.
Cindy Samuelson, senior vice president of the Kansas Hospital Association, said the additional payments are especially critical in a rural state such as Kansas, where some researchers have found that 87% of rural hospitals are in the red. Kansas is one of 10 states that did not expand Medicaid, and like other nonexpansion states, it will have to begin reducing direct payments to 110% of what Medicare pays starting in 2028.
“Over time, commercial payers are paying less and less,” Samuelson said. “Many hospitals in our state are at risk of closure.”
Samuelson said that in rural areas, health care providers see fewer patients, which makes it hard to spread out the cost of care and make up for losses that come from serving underinsured, Medicaid and Medicare patients. One result is that rural hospitals are trimming services. A report published this year by Chartis, a health care consulting firm, found that between 2011 and 2023, nearly 300 rural hospitals across the country stopped offering obstetrics care, and 424 rural hospitals ceased chemotherapy services.
In Hutchinson, Kansas, Benjamin Anderson, CEO of the rural and community-owned Hutchinson Regional Health System, said his hospital barely broke even this year, and lower Medicaid payments will take a toll. The 190-bed hospital serves more than 65,000 people in the central Kansas region, and sees a lot of patients who are struggling with mental health issues and substance use disorders.
When we think about the cuts to Medicaid, it isn’t simply about cutting services to the poor. It’s threatening services to everyone.
– Benjamin Anderson, CEO of Hutchinson Regional Health System
“We are closely managing our workforce expenses. We’re going to be relying more heavily on philanthropy,” Anderson said, adding that the hospital wouldn’t lay off staff but would reduce the number of workers by not filling open positions.
He said his hospital has some cash reserves that should enable it to keep going, but that many other rural hospitals lack such a cushion.
“When we think about the cuts to Medicaid, it isn’t simply about cutting services to the poor. It’s threatening services to everyone, because in a rural community, we all get care in the same place,” he said. “If we cut out the safety net that’s sustaining these hospitals, everyone’s health care is threatened.”
Searching for answers
Three hours northeast of Hutchinson is the rural town of Holton, where about 3,400 people live. Holton Community Hospital is a 14-bed critical access hospital, meaning that it provides emergency care around the clock for a rural community. For the past two years, it has been struggling, according to Carrie Lutz, the hospital’s CEO.
Lutz said the hospital is not part of a broader health care group, and it relies on philanthropy and local taxes. Due to financial strains, it’s in the process of selling off its home and hospice services to another health care facility. The cap on extra payments will be an additional barrier, she said.
Samuelson said Kansas is applying for money under the five-year, $50 billion Rural Health Transformation Program, which Congress added to the One Big Beautiful Bill Act amid concerns about its impact on rural hospitals. She expects Kansas to get at least $500 million between 2026 and 2030.
Rural hospitals in Mississippi also hope to tap into those funds. The Mississippi Hospital Association, which is advising state leaders on their application, said it expects Mississippi to get at least $500 million over the next five years.
Like Kansas, Mississippi did not expand Medicaid under the Affordable Care, a decision that deprived it of additional Medicaid patients and thus extra revenue.
“A few years ago, we had several rural hospitals that were facing some imminent closure challenges, and so our enhanced supplemental payment based on the average commercial rate has been a lifeline,” said Richard Roberson, president and CEO of the Mississippi Hospital Association.
“What we’re concerned about is that when those payments start to decrease, then we’re going to be right back to where we were in 2022, with concerns about rural hospitals again.”
Roberson said Medicaid, with the additional payments, had become “one of the best payers, if not the best payer, for our hospitals over the last two years,” and helped a lot of hospitals stay out of the red.
He said the new rural health care fund is promising, but noted that Mississippi will decide where to spend any money it gets, and some rural hospitals might miss out.
“We want to make sure we’re working with the state to provide sustainable solutions, not one-time fixes,” Roberson said. “The big wild card is the Rural Health Transformation fund and what the state chooses to do with that money.”
This story was originally produced by Stateline, which is part of States Newsroom, a nonprofit news network which includes Louisiana Illuminator, and is supported by grants and a coalition of donors as a 501c(3) public charity.
Louisiana Illuminator is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. Louisiana Illuminator maintains editorial independence. Contact Editor Greg LaRose for questions: info@lailluminator.com.
Note: The following A.I. based commentary is not part of the original article, reproduced above, but is offered in the hopes that it will promote greater media literacy and critical thinking, by making any potential bias more visible to the reader –Staff Editor.
Political Bias Rating: Center-Left
The content presents a critical view of a policy associated with a Republican administration, emphasizing the potential negative impacts of Medicaid payment cuts on rural hospitals and vulnerable populations. It highlights concerns from healthcare providers and advocates while also including conservative perspectives on fiscal responsibility. The overall tone leans toward concern for social welfare and healthcare access, common in center-left reporting, but maintains a balanced presentation by acknowledging opposing viewpoints.
SUMMARY: Lafayette is finally gaining momentum to tackle blight, with LEDA becoming a redevelopment authority for the Northside, new leadership at the Housing Authority, and property donations to nonprofits. However, sustained, large-scale commitment is needed to translate efforts into real social and economic improvements. Historically, Lafayette has lacked cooperation among developers, nonprofits, and government, hindering progress. Redevelopment costs are high, making market-driven solutions insufficient. Proposals include creating a land bank to clear titles on adjudicated properties, improving government processes to support developers, and establishing a substantial redevelopment fund. While challenging, Lafayette’s community has the potential to prioritize and drive meaningful change over time.
SUMMARY: Skies have cleared with drier air, but patchy fog is possible this morning. Expect sunny, much warmer weather with highs in the mid-90s today and tomorrow. Southerly winds will persist, and clouds increase tomorrow. A cold front arrives late Friday, bringing more clouds and scattered showers and thunderstorms. Currently, northwest flow dominates due to a trough and closed low near the Great Lakes, which will lift northeast, allowing ridging to build through Friday. The cold front will move south Saturday into Sunday. Next week, a deepening Pacific Northwest trough and expanding southwestern ridge will influence the region’s weather.
Skies have cleared with drier air aloft, but patchy fog is still possible this morning. Expect plenty of sunshine but with much warmer temperatures. We will tap into the mid 90’s today and through tomorrow. Winds will remain southerly, and clouds will move in tomorrow. By late Friday, a cold front will arrive sparking up increased cloud cover and scattered showers and thunderstorms. It also gives us a chance to cool down to the lower 80’s through early next week. We should clear and dry out on Monday. Temperatures will gradually warm back to the lower 90’s by Wednesday.
www.thecentersquare.com – By Brandon Arnold and Daniel J. Erspamer – (The Center Square – ) 2025-09-04 08:52:00
The One Big Beautiful Bill, signed by President Trump, prevents a $4 trillion tax hike, saving the average Louisianan $2,100 and encouraging investment in capital goods and research to boost U.S. competitiveness. However, the nation faces a severe debt crisis with over $37 trillion owed, costing more than $1 trillion annually in interest—exceeding national security spending. Federal spending, especially post-pandemic, is the highest since 1946. Congress, led by Louisiana’s delegation and Speaker Mike Johnson, must control spending, ideally adopting a balanced budget for the first time in 25 years. Reducing debt would lower interest rates and benefit the economy broadly.
In Louisiana and across the country, good tax policy can improve the wellbeing of hardworking individuals, families and small businesses.
That’s why we were pleased to see the tax provisions in One Big Beautiful Bill signed into law by President Donald Trump. This was a big win – averting a $4 trillion tax hike on families and businesses while permanently locking in tax changes that will create hundreds of thousands of good-paying jobs.
More specifically, the bill prevents a $2,100 tax increase for the average Louisianan.
The new law also makes investments in the United States more attractive by removing tax penalties against buying capital goods, like machinery and farm equipment, as well as research and development. This will help American companies win the race against China and other geopolitical foes for technological advancement in artificial intelligence, quantum computing, and biopharmaceuticals.
But taxes are only part of the story. Our nation is facing a mounting debt crisis that must be addressed. The national debt now exceeds $37 trillion, which amounts to more than $323,000 per taxpayer. The federal government now pays more than a trillion dollars annually just on interest payments on this massive debt – that’s more than we spend on national security.
Government spending has been out of control for a long time – but, especially at the federal level, things have gotten much worse since the pandemic. With the exception of the financial crisis of 2008–09 and the pandemic, federal spending as a percentage of GDP is the highest it’s been since 1946.
Congress needs to get a handle on spending, and fast. Our superb Louisiana delegation, led by Speaker Mike Johnson, is in an ideal position to lead this effort. Of course, they’ve already taken a relatively small, but important, step by passing a $9 billion cut to foreign aid programs and public broadcasting. But there’s much more work to be done.
A great start would be the adoption of a balanced federal budget – something we haven’t seen in a quarter century. President Donald Trump has repeatedly stated that he would like to balance the budget, and Speaker Johnson has, throughout his career, spoken of the moral and constitutional responsibility to bring the federal budget to balance.
Now is the time to set things in motion. As Congress returns from its August break, it should start to develop a second, even more beautiful bill (maybe not so big this time), focused on tackling our nation’s debt crisis. This would help reduce the massive financial burden we are placing on our kids, grandchildren and beyond, and would also provide immediate economic benefits.
While Jerome Powell and the Federal Reserve have been the target of considerable controversy of late in their approach to interest rates, the Fed isn’t the only game in town. By cutting spending, the federal government would borrow less money. That’s an even better pathway to lower rates – something that would benefit prospective homebuyers, entrepreneurs looking to start a small business, and folks carrying credit card debt during these challenging times. No matter what actions the Fed takes, Congress and President Trump need to do their part by reining in spending.
Government spending has spiraled out of control at nearly every level. It’s time to fix it, here at home and in Washington, D.C. The One Big Beautiful Bill will help fuel stronger economic growth, but it isn’t nearly enough to fix the mess caused by decades of overspending and fiscal irresponsibility. President Trump and Congress need to roll up their sleeves and start cutting spending in a big way.
Brandon Arnold is executive vice president of the National Taxpayers Union. Daniel Erspamer is CEO of the Pelican Institute for Public Policy,
Note: The following A.I. based commentary is not part of the original article, reproduced above, but is offered in the hopes that it will promote greater media literacy and critical thinking, by making any potential bias more visible to the reader –Staff Editor.
Political Bias Rating: Right-Leaning
The content presents a clear ideological stance that aligns with conservative and fiscally conservative viewpoints. It praises tax cuts enacted under President Donald Trump, emphasizes the need to reduce government spending and national debt, and supports budget balancing efforts championed by Republican leaders. The language used, such as describing government spending as “out of control” and framing tax cuts as beneficial for job creation and economic growth, reflects a right-leaning perspective. The article does not merely report on ideological positions but actively promotes a specific fiscal policy agenda consistent with conservative principles.
