U.S. Hospitals Make Cuts After Trump Health Bill
Hospitals across the U.S. are implementing deep cost cuts and layoffs after the passage of the Trump administration's signature health reform, dubbed the “big beautiful bill.” The service reductions are fueling Democratic attacks and are expected to become a major issue in the upcoming midterm elections.
The new law's primary impact on hospitals stems from its significant reductions in federal Medicaid spending over the next decade. Similar previous proposals aimed to achieve savings by ending Medicaid expansion and imposing per-capita limits, which directly reduces hospital reimbursement for treating low-income patients. A Congressional Budget Office analysis of a precursor bill, the American Health Care Act, projected that its changes would reduce federal Medicaid spending by $880 billion and increase the number of uninsured Americans by 24 million over ten years. Studies have estimated that repealing ACA provisions could cost hospitals hundreds of billions in revenue, leading to a surge in uncompensated care that providers would have to absorb. Rural hospitals are particularly vulnerable to these funding changes. Over 140 rural hospitals have already closed or converted since 2005, with financial distress being the primary driver. Hospitals in states that have not expanded Medicaid have been found to be at a significantly higher risk of closure. Major hospital systems have already begun announcing cost-saving measures, citing the new federal funding landscape. Vanderbilt University Medical Center announced up to 650 layoffs as part of a plan to cut its budget, while UC San Diego Health is eliminating over 200 positions. In Los Angeles County, health officials have instituted a hiring freeze, warning that the cuts will be "devastating." The cuts extend beyond hospital-specific funding, with the administration also laying off thousands of workers at the Department of Health and Human Services and canceling billions in grants to state and local health departments. These grants were used for tracking infectious diseases, providing behavioral health services, and tackling the opioid crisis. Heading into the midterm elections, healthcare costs are the top economic worry for American voters, including independents, Republicans, and Democrats. Polls show voters trust the Democratic party more than the Republican party to handle healthcare costs, an issue that a majority of voters say will have a major impact on their choice of candidates.
