() Cuts to Medicaid, the joint federal and state insurance program that helps cover medical costs for 72 million Americans with limited income and resources, seem all but certain after the Senate released a framework for its version of the “big, beautiful bill” this week. It calls for even steeper cuts than the House version of the bill passed last month.

Two reports out this week illustrate what cuts could mean for rural Americans who “generally are poorer, sicker and older than their urban counterparts,” according to John Eich, director of the Wisconsin Office of Rural Health.

The American Hospital Association estimates the House bill “would result in 1.8 million individuals in rural communities losing their Medicaid coverage by 2034. In addition, select Medicaid provisions … would result in a $50.4 billion reduction in federal Medicaid spending on rural hospitals over 10 years.”

The report by the Sheps Center for Health Services Research, released by Senate Democrats, states that the House bill could negatively impact over 330 rural hospitals considered at risk nationwide due to their current financial situation.

“Substantial cuts to Medicaid or Medicare payments could increase the number of unprofitable rural hospitals and elevate their risk of financial distress. In response, hospitals may be forced to reduce service lines, convert to a different type of health care facility, or close altogether,” according to the Sheps Center.

While Democrats are united in their opposition to Medicaid cuts, some Republican Senators have expressed concern as well. One of the most vocal is Missouri Sen. Josh Hawley.

When asked by what he thinks of the current iteration of the bill and its impact on rural hospitals, he said, “Half of the hospitals in state [are] rural. I grew up in a town of 4,000 people, like I’ve lived this. This is a problem. This bill needs work.”

Two of the most controversial aspects of the House bill, and subsequently the Senate’s current version, are the work requirements and provider taxes.

The main clause of the House bill’s work requirement calls for states to condition eligibility for those ages 19-64 on showing they are working or taking part in qualifying activities (like attending school) for at least 80 hours per month. 

Republicans argue they’re making sure that able-bodied people are working if they want to receive Medicaid benefits. This is part of their stated quest to reduce waste, fraud, and abuse.

Provider taxes are a fairly complicated but legal tax maneuver that allows states to collect additional money from the federal government for reimbursement of some patient costs that the state can then keep. It has become integral to the Medicaid reimbursement system, and states rely on this extra money.

For example, if a procedure costs $100, the state will reimburse the provider (i.e., a hospital) at a hypothetical rate of $120. The state then shows the federal government that it spent $120. 

Since Medicaid is a joint program between the federal government and the states, the federal government reimburses states for a percentage of the cost. It varies from state to state, but it’s often about 60%.

So instead of sending states $60 from a $100 procedure, the federal government sends $72 from a $120 procedure back to the states to reimburse the payment.

That money goes to pay the provider. But the state then charges the provider a tax on the reimbursement. Right now, there’s a 6% tax limit. 

Different states currently tax providers at different rates. But in the end, both the state and the provider benefit, and it raises millions of dollars for each state. (Alaska is the only state that does not use provider taxes for Medicaid.) 

The House bill would freeze the current tax rate, meaning they would not be able to increase it, even if more is needed to pay for patients. The Senate bill would be harsher in that it would limit the states from taxing anything above 3.5%. So, states that tax between 3.5 and 6% would lose that money in the future.

Ohio Sen. Bernie Moreno is critical of the provider taxes, telling , “We support rural health tremendously, but there are some bad actors there…The states have gamed the system for way too long, and we’re fixing that. These provider taxes…Why are the states doing this money laundering scheme?”

Love pushes back on that description. “Don’t call it money laundering, and don’t call it Medicaid fraud. … It’s a practice that’s been acceptable since the 1980s, and if you want to address it, fine, address it. But don’t label the people that are doing it legitimately as people that are committing Medicaid fraud.”

Love acknowledges that there are bad actors in the system but says most providers want to do things the right way and welcome the elimination of bad actors, though he believes the bill will not eliminate fraud and abuse. 

While Moreno wouldn’t guarantee there would be no negative impact on rural hospitals, he said, “We spent hours, weeks of deliberation to make certain that we don’t harm any people…Every policy that we make here affects a real human being.”

In Wisconsin, Eich said, “one in three rural children are on Medicaid. Fourteen percent of rural seniors are on Medicaid. So if you think about an elder in your family who is used up their life savings for expensive nursing home long-term care, and they have nowhere else to turn, Medicaid steps in. And so those are the kind of services that are going to be cut.”

The nonpartisan Congressional Budget Office estimates that the House bill would increase the number of uninsured by almost 8 million, and over 10 million fewer people would be enrolled in Medicaid.

Eich believes these changes could lead to a one-two punch for rural Americans in particular. Not only will they avoid care because they can’t afford it, but their access to care is likely to decrease because nursing homes or hospitals could close.

“Small rural hospitals around the state are often sort of at that edge of being sustainable, and this will be a devastating blow for them maintaining their income. Because we’re not talking about hospitals rolling in money. We’re talking about hospitals staying open.”

Love points out that Medicaid cuts don’t just harm people who use the insurance program; they can hurt everyone if a hospital has to close or eliminate a service. 

He explains, “We’ve had rural hospitals over the last few years, gradually here in Texas, shut down OB-GYN and labor and delivery. In some parts of rural Texas, people have to drive two hours or more to deliver a baby. That is unacceptable on so many fronts, but especially for the safety of the mother and the safety of the infant.” 

The Senate continues to negotiate its version of the budget bill. If it passes, it will get sent to the House for a vote. Republicans have a goal of sending a final version to the President’s desk by July 4.