Hospital Association Warns 46 Million Rural Americans Face Care Risks as Medicaid Cuts and Expired Tax Credits Hit

The American Hospital Association (AHA) released a report on Oct. 13 warning that access to care is at risk for the more than 46 million Americans who live in rural communities. The group says workforce shortages, thin finances and federal policy changes are converging on hospitals that often have no alternative provider nearby.

The AHA is a hospital trade group with a stake in federal payment policy. Its numbers are still worth laying out, because several of them line up with independent research.

What the AHA report found

More than 40% of rural hospitals operate at a financial loss, according to the report. Hundreds more are considered at high financial risk.

Since 2010, more than 150 rural hospitals have closed or converted. In that time, 331 hospitals eliminated obstetric services and 448 stopped offering chemotherapy, the AHA says. Patients travel farther as a result.

Payer mix is a core problem. Medicare and Medicaid account for 72% of rural hospital discharges, per the AHA. The group says rural hospitals absorbed more than $7 billion in insufficient Medicare payments in 2024, up 20% since 2020.

The AHA names three newer pressures: Medicaid reductions, the expiration of enhanced Affordable Care Act premium tax credits, and the rapid growth of Medicare Advantage. It expects more uninsured patients, more uncompensated care and lower revenue.

"The warning signs have become impossible to ignore," AHA President and CEO Steve Walsh said in a statement.

The money on the table

Medicaid spending is projected to fall by nearly $1 trillion over the next decade. The AHA estimates the planned cuts will reduce spending in rural communities by $137 billion.

The federal government has also created the $50 billion Rural Health Transformation Program, a five-year initiative. By the AHA's math, the cuts are well over twice the size of the new program.

The administration frames it differently. CMS announced $78 million from the program for 216 rural healthcare providers in Texas under an initiative called Rural Texas Strong. The money goes to chronic disease prevention, workforce recruitment and retention, and equipment and facility upgrades.

"We are giving states the flexibility to build solutions around the people they serve, while demanding accountability for results," HHS Secretary Robert F. Kennedy, Jr. said. CMS Administrator Dr. Mehmet Oz said states know best what their rural communities need.

CMS credited the funding to the Working Families Tax Cuts Act, which it said Republicans passed and Democrats unanimously opposed.

The AHA wants something different done with the cash. Its recommendations include reversing the Medicaid cuts and directing transformation funds to rural hospitals. Hospitals had hoped for that help, but states are spending some of the money on primary care and community wellness programs.

Rural and urban closures look similar

The rural story is not the whole hospital story. Harvard researchers, whose study was highlighted by Stateline, found a closure rate of 9.1% for urban hospitals and 8.3% for rural hospitals.

Across both settings, for-profit, small and safety-net hospitals were most likely to close. So were hospitals in counties with higher poverty or less access to transportation.

The study counted 432 closures between 2010 and 2025 against 216 openings, a net loss of more than 24,000 beds. New hospitals were mostly urban, for-profit and small, so rural areas shared less in the openings.

That is the point of the rural-urban comparison. A closed rural hospital leaves fewer people with a fallback, which is why the same closure rate lands harder.

Where it shows up

Labor and delivery units are often the first service to go, and restoring them is hard. In Marshall, Missouri, Fitzgibbon Hospital delivered more than 250 babies last year. It was recently sold in bankruptcy proceedings, according to the Georgetown Center for Children and Families.

The national obstetric trend is steep. The share of rural hospitals providing obstetric services fell from 57% in 2010 to 48% in 2022, according to figures cited by a former head of the military health system in a MedPage Today commentary.

The same writer cites CDC data on health outcomes. In 1999, the age-adjusted death rate in rural America was 7% higher than in urban areas. By 2019 it was 20% higher.

Cost worries compound the access problem. A KFF/Associated Press survey of rural registered voters found 66% are at least somewhat worried about affording healthcare for themselves or their families.

The policy argument

Critics of the current direction, including the Georgetown center, argue the federal government is propping up rural health with grants while knocking it down with Medicaid cuts. Georgetown has also tracked new Medicaid paperwork requirements it says will affect rural coverage.

Jeanne Lambrew, a former government health official, writes in a policy journal that rural challenges have been worsened by health system consolidation and corporatization, closures, labor trends and recent federal funding cuts. She says part of her analysis is speculative and based on her two decades in government.

The administration's position is that the transformation program puts resources directly into rural communities with accountability attached. No source in the record disputes that the money is being distributed. The dispute is over whether it is enough, and whether it is going where hospitals say it is needed.

Lambrew writes that rural residents and the clinicians who serve them will command attention from policy officials in 2027, no matter the outcome of the midterm elections. The immediate test is how states allocate the remaining transformation dollars, and whether the AHA's request to steer them toward hospitals gains traction.