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Medicaid cuts threaten hundreds of hospitals, new report finds

Together, the hospitals provide care for nearly 7 million patients across the U.S., according to the analysis.

Across the country, hospitals have already warned they may need to lay off staff members or scale back care, including maternity and mental health care, because of Medicaid cuts.Image Source / Getty Images

March 31, 2026, 5:00 AM EDT

By Berkeley Lovelace Jr.

More than 400 hospitals across the United States are at high risk of closing or cutting services because of the Medicaid cuts in President Donald Trump’s “big, beautiful bill,” according to an analysis from the progressive watchdog group Public Citizen.

The fallout could make it harder for millions of people to get care and put thousands of health care workers’ jobs at risk as hospitals lose a key source of federal funding. Medicaid covers about a fifth of all hospital spending.

The Medicaid cuts come in phases, with more significant changes, including work requirements, in 2027 and limits on how states raise funds in 2028. Overall, the law is expected to reduce federal Medicaid funding by roughly $1 trillion over the next decade.

“We’re seeing hospitals that are already under severe financial strain having to make decisions about how to stay financially solvent,” said Eileen O’Grady, a researcher in Public Citizen’s Congress Watch division and the report’s author. “That has pretty clear implications for people who live in that community. It also has ripple effects on other hospitals in those communities.”

The analysis draws on hospital financial data from the Centers for Medicare and Medicaid Services from 2022 through 2024, covering about 95% of U.S. hospitals. The group defined at-risk hospitals as those in which Medicaid and other low-income government programs made up at least 20% of revenue and that have been operating at a loss in recent years.

The report doesn’t estimate when hospitals could close or cut services.

“Closure is the worst-case scenario, but it also doesn’t preclude hospitals from having to make really tough decisions about cutting services that might be essential to those communities but are just no longer financially viable,” O’Grady said.

Across the country, hospitals have already made statements warning they may need to lay off staff or scale back care, including maternity and mental health care, because of the Medicaid cuts.

For many patients, hospitals are the last place to turn when there are few or no other options for care.

“When hospitals close, patients have less access to the care that they need,” said Gideon Lukens, director of research and data analysis on the health policy team at the Center on Budget and Policy Priorities, a nonpartisan research group. “They have to travel further or wait longer in other hospitals that become overcrowded. That additional time can be the difference between success and failure of time-sensitive, potentially life-saving treatments.”

The closures also add strain to the hospitals that take on the extra patients. O’Grady said doctors end up having “less patience, less time, less capacity to provide the highest quality care.”

“It can be very dangerous for hospitals to be under this kind of strain,” she said.

The analysis found a total of 446 at-risk hospitals, with at least one at-risk hospital in 44 states and Washington, D.C.

About 60% of the at-risk hospitals — 267 facilities — are in urban areas, even as much of the debate around Medicaid cuts has focused on rural hospitals. Black and Latino people stand to be the most affected by the cuts.

The hospitals span both Democratic and Republican-led states, though the states with the largest number of at-risk hospitals are California, New York, Illinois and Washington.

Republicans also represent several congressional districts with the highest number of at-risk hospitals. House Republicans who voted for the Medicaid cuts have 196 at-risk hospitals in their districts, while Senate Republicans — all of whom back the cuts — represent 146 at-risk hospitals in their states, according to the analysis.

The cuts could lead to a worsening crisis, especially for rural hospitals, said Zachary Levinson, the project director of the KFF Project on Hospital Costs.

He said that by his estimates, Trump’s law sets aside $50 billion to support rural communities, but could reduce federal Medicaid spending in rural areas by far more — about $137 billion over a decade.

James Jackson, the CEO of Alameda Health System in Oakland, California, said the Medicaid cuts represent an “existential threat.”

Alameda Health System, which gets 60% of its revenue from Medicaid payments, announced in December that it would lay off nearly 300 employees and lose more than $100 million annually by 2030. (The health network was not included on Public Citizen’s at-risk list, though the report notes its financial troubles.)

The layoffs, set to take effect in March, have since been delayed.

Proposed cuts included mental health services, care for patients with chronic conditions and an ambulatory plastic surgery program. Jackson said closing hospitals is not on the table, but the system has continued to look at scaling back services.

“I don’t think the impact is going to be a positive one,” he said. “We are often the provider of last recourse, so if we’re not able to provide a service, there will be a delay in receiving care at one of the other systems in the area or they may not provide it at all.”

Trinity Health, a Michigan-based hospital system with facilities in other states, said it’s projected to lose $1.5 billion due to “recent and future government policy changes.”

In January, it said it was laying off 10.5% of its billing staff. One of its hospitals, St. Mary’s Sacred Heart Hospital in rural northeast Georgia, announced last October it was closing its maternity unit.

In a statement, a Trinity Health spokesperson shared a previous statement that said in part that “more reductions” are being considered by the federal government and it’s “not possible to simply absorb such a significant financial impact without making thoughtful, forward-thinking changes.”

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Berkeley Lovelace Jr.

Berkeley Lovelace Jr. is a health and medical reporter for NBC News. He covers the Food and Drug Administration, with a special focus on Covid vaccines, prescription drug pricing and health care. He previously covered the biotech and pharmaceutical industry with CNBC.