US Hospitals Cut Services Citing New Cost Law
Hospitals across the U.S. are making significant staffing and service cuts in response to a cost-containment law passed last year. The reductions are becoming a political issue for Democrats ahead of the midterms, who are blaming the "big beautiful bill" for declining patient care.
The law, officially titled the "One Big Beautiful Bill Act" (OBBBA), was passed by the House on May 22, 2025, and signed into law on July 4, 2025. It enacts over $1 trillion in federal healthcare spending cuts over the next decade, primarily by slashing funding for Medicaid and the Affordable Care Act (ACA). The Congressional Budget Office projects the legislation will lead to 10.9 million people losing health insurance coverage. The cuts are expected to hit hospitals hard, with a projected loss of $661 billion in revenue over the next decade, stemming from reduced Medicaid and Medicare payments and a rise in uncompensated care. Hospitals in at least 30 states are expected to see reductions in state-directed payments. Rural hospitals are particularly vulnerable; prior to the law, 44% were already operating with negative margins, and over 300 are now considered at immediate risk of closure. Specific examples of the law's impact in early 2026 include Alameda Health System in California laying off 187 employees, Pomona Valley Hospital Medical Center eliminating 265 positions, and Hennepin Healthcare in Minneapolis cutting around 100 jobs and closing clinics. In Virginia, Augusta Health cited the federal law when it announced the closure of an urgent care and two primary care clinics.
