Kentucky’s 2014 Medicaid expansion improved health care and drug treatment in some of America’s poorest counties. Now, the area is bracing for cuts some fear will roll back gains.
HAZARD, Kentucky – The road to Mike Caudill’s salvation runs alongside a wooded creek, winding through Appalachian hillsides dripping with Kudzu, past a Baptist church and a country gas station before turning through gates with a sign reading “Beacons of Hope.”
Here, in a former metal yard turned residential drug rehabilitation center just outside of town, the 40-year-old arrived after years of addiction that began around the time opioid pain pills flooded into the hardscrabble region’s mountains and valleys.
Caudill once dreamed of playing college basketball. But by high school he’d fallen into drugs.
Over time, his work as a house painter fell away. He stole from relatives. He sold drugs to buy his own. He lived in a house without power, water or heat, disappearing with his kids’ toys or TV to hawk for meth.
In 2023, after a few previous attempts to quit, he entered a six-month residential treatment program at Beacons and stayed — finally wrenching himself loose from 18 years of addiction. It was a costly recovery only possible, he said, because Medicaid paid for his treatment.
“I wouldn’t be alive without it,” he said.
In the heart of Appalachia here in Eastern Kentucky, Caudill is among the beneficiaries of the state’s 2014 Medicaid expansion to low-income adults, which brought an outsized boost to some of America’s poorest counties beset by disproportionately high rates of chronic disease, disability and opioid abuse.
After extending Medicaid to adults under 138% of the poverty line, Kentucky’s uninsured rate fell from 14.3% to 5.4% by 2023. Medical visits increased. Hospital budgets eased. Health clinics expanded and hired workers, buoying local economics. And drug treatment increased, with one study linking the expansion to fewer overdose deaths.
“It’s hard to overstate how important Medicaid expansion was to Eastern Kentucky,” said Dustin Pugel, a researcher with the progressive Kentucky Center for Economic Policy. “Nearly half of the population is able to see a doctor or take medicine because of that program.”
But if the hills and hollows where much of Vice President JD Vance’ s “Hillbilly Elegy” was set – and where America launched the “war on poverty” that created Medicaid – served as a key testing ground for that expansion, it’s now gearing up for a test of its staying power.
President Trump’s “Big Beautiful Bill” signed in July cuts nearly $1 trillion from Medicaid and a related children’s health program over a decade, with the largest share of savings achieved by a new 80-hour-a-month work requirement. The law’s full provisions are projected to increase the number of people without health insurance by 10 million by 2034.
Cuts to a federal program that Kentucky uses to pay providers means the state is projected to see a nearly $11 billion decline in rural Medicaid spending, one of the largest drops in the nation that will impact state hospitals and clinics, according to a KFF analysis. Republicans set aside $50 billion to aid rural health care providers, but experts expect it won’t offset Medicaid spending declines.
Kentucky’s Democratic Gov. Andy Beshear, considered a possible 2028 presidential candidate, said the cuts would leave roughly 200,000 uninsured and leave up to 35 rural hospitals at risk of closing, most in Eastern Kentucky where they are critical to care and small-town economies.
Republican U.S. Rep. Hal Rogers, who represents the 5th Congressional District covering much of the region that has the state’s highest Medicaid rates, said the change will only root out people who don’t need to be in the program, preserving it for those who do.
“The bill protects the longevity of Medicaid benefits for our most vulnerable population by slashing waste, fraud and abuse of the program,” he said in a statement.
U.S. House Speaker Mike Johnson, R-Louisiana, has said the target is “29-year-old males sitting on their couches playing video games.”
How well people living with the instability of addiction, the irregularities of low-income work or poor access to transportation or internet navigate new requirements will take time to play out. Republicans delayed the work requirement until after the 2026 midterm election elections and provider cuts until 2028.
A lot could also depend on how much red tape is involved when states design systems for reporting work or gathering documentation to apply for an exemption such as being medically frail, including those with a substance use disorder.
But in Kentucky, some medical providers are already looking for ways to tighten services or find ways to help patients meet the new requirements.
The coming changes set up a key political test of whether a rollback in benefits in a once-blue coal mining region that has turned deep red will generate political backlash among Trump voters.
What worries health advocates most is how their region, which drew an outsized benefit from Medicaid expansion, is now vulnerable to an outsized hit.
“It’s definitely going to take its toll,” said Greg Burke, a former federal prison official who now runs the Beacons of Hope rehabilitation center, where nine in 10 clients rely on Medicaid.
How upcoming Medicaid cuts could harm children with disabilities
Parents of children with disabilities say the Medicaid cuts in the “One Big Beautiful Bill” will directly impact the well being of their kids.
At a clinic dependent on Medicaid, recipients face uncertainty
On a recent Monday afternoon in Hazard, the county seat of Perry County, Sherri Crace walked into a former K-Mart built atop a former coal mine that now houses a 105,000-square-foot Primary Care Centers of Eastern Kentucky clinic. Like Crace, half of the clinic’s patients are on Medicaid.
The 50-year-old Hazard resident, dressed in a black Harley Davidson T-shirt, was called to an exam room, where a health worker drew a blood sample as part of her treatment for diabetes and the neuropathic pain that accompanies it.
Crace, a high-school graduate who has worked a string of jobs including with a siding company, was grateful when Kentucky expanded Medicaid under the Affordable Care Act from covering traditional groups such as pregnant women and the disabled to include low-income adults.
She was working but couldn’t afford insurance. Better paying jobs that offer affordable private insurance are few and far between, she said.
“When coal was going, most of the men around here had jobs,” she said. “Coal pay is pretty good, but that’s gone. It’s long gone. There’s nothing here now.”
At the time, she recalled, Republicans railed against the Affordable Care Act, likening what many called Obamacare to socialism.
“Everybody was just tore up over it,” she said. “Obamacare was a good thing for me.”
She wasn’t alone. Between 2013 and 2015, Perry County’s uninsured rate dropped from 17% to 8%. Significantly, one study showed, fewer residents were skipping medications and more were getting regular care for chronic illnesses in a region that has some of the nation’s highest rates of diseases – including cancer.
“I think the Medicaid expansion really helped identify sick people and start to help treat them sooner than later,” Primary Care Clinic CEO Barry Martin said.
The percentage of uninsured patients at his clinic fell from 13% to 1%, stemming losses and allowing them to expand services and grow to more than 400 staff in multiple locations. Medicaid spending to providers represents over 13% of GDP in Eastern Kentucky.
Now the clinic, and patients such as Crace, are bracing for change.
Starting Jan. 1, 2027, most adults on Medicaid and parents with children above age 13 will have to regularly document that they completed 80 hours of work or community service per month or enroll in an educational program at least half-time. It applies to able-bodied adults 18-64 who are not disabled and deemed capable of working.
Those requirements must be met for a month ahead of enrollment. And the state must perform eligibility checks every six months instead of a year.
That’s a big change from a few years ago, when the region notched some of the nation’s highest COVID-19 rates and the Biden Administration allowed people to remain on Medicaid during the pandemic. Since eligibility checks were restored, statewide enrollment fell from 1.7 to 1.4 million.
Martin agrees with the idea of work requirements. And Kentucky has already passed legislation calling for them. He could hire some people to work at the front desk registering patients, he said.
Between 2022 to 2024, about 51% of Kentucky adults on Medicaid were working full or part time. Another 36% were ill or disabled or caring for family members. Nearly 11% were going to school, retired or couldn’t find work. Only 2% were not working for some reason which the survey couldn’t identify, according to the economic policy center.
But Martin worries people will lose coverage because they aren’t savvy, feel the bureaucracy is too cumbersome or fail to get around to it. Because Medicaid is administered by managed-care companies that offer coverage under different program names, some don’t even realize they’re on Medicaid.
An Arkansas program started in 2018 and stopped by federal courts cut more than 18,000 residents from Medicaid within the first seven months, often because people were unaware of paperwork requirements to keep their coverage. The program did not increase employment.
Fewer covered patients would mean more unreimbursed costs for hospitals and less money to fund services and pay workers. That in turn would take money out of the local economy, potentially impacting other businesses. To get ahead of it, Martin is pressing the state to allow state health insurance navigators the ability to make eligibility determinations on site, rather than relying on patients to set up appointments or file paperwork he believes too many will fail to do.
That could help keep eligible recipients on the rolls to soften an impact that remains unclear at this point, he said.
“We know it’s going to impact us, we just don’t know how hard,” he said.
For Crace, working became tougher when she went through a divorce and began taking care of her 76-year-old mother, Luetta, whose health problems include dementia. While she may qualify for an exemption, she worries about being tripped up by constant paperwork checks.
“I really don’t like the fact that, if (President Trump) is going to try to start saving money, he looks at the poorest of the poor,” she said.
Down the hall, in another exam room, Denver Feltner sat with his shirt lifted by arms dotted with tattoos and letters spelling “Wild Card” on his knuckles. Dr. John Jones strolled in and examined an implanted glucose monitor connected to an insulin pump that had become dislodged.
Feltner, 38, is a father of five children from a previous marriage. He said he lives in a double-wide and works two jobs, earning $16 an hour as a call dispatcher and $13 at a Double Quick gas station. Neither had an affordable private health care option, he said.
While finding well-paying career jobs is difficult, Feltner, a Trump voter, thinks people will take available jobs to keep Medicaid coverage.
“There’s jobs, if you go out and look for them, and you’re willing to do it, but a lot of people just aren’t willing to take any kind of job,” he said. “You got a lot of able-bodied people just that, just sit at home and live off the government and draw like $1,000 in food stamps. They still go out and work, they just go out and do stuff and get paid in cash, like cutting grass.”
Feltner lost Medicaid following a split with his children’s mother. He took on more work and became ineligible. So he enrolled in a subsidized Health Insurance Marketplace plan.
While his premiums are very low, his deductible and co-pays for things like prescriptions for insulin equipment run hundreds of dollars per month. Any hospital visit carries a $3,000 deductible. Amid rising costs for food and higher electricity rates, he said, “it’s been a struggle lately.”
And with the ACA’s enhanced premium tax credits enacted during the pandemic – which boosted enrollment and subsidies – current set to expire at the end of 2025, premiums are expected to increase for 2026 by an average of 75%, according to health experts at Johns Hopkins University.
He’s not sure what he’d do if that became unaffordable.
“I’d probably be really bad sick in the hospital with bills I can’t pay,” he said.
Hospitals eye funding cuts and reductions
A 32-mile drive to the north, across the county line, Ron McIntosh took a deep breath outside a small hospital along the North Fork Kentucky River.
Inside, doctors worked to figure out why his daughter was sick.
The 55-year-old drove 45 minutes through the mountains to Kentucky Rivers Medical Center, the closest hospital to his home.
It’s located in Breathitt County, where Vice President JD Vance wrote about visiting from Ohio as a child in his 2016 memoir “Hillbilly Elegy,” which recalled an area struggling with poverty, addiction and instability.
Now the medical center is among 35 rural hospitals – the most of any state – that University of North Carolina researchers identified as being financially vulnerable to closure.
If that were to happen, McIntosh said he’d see his drive more than double.
“It would be really bad for us,” he said.
Republicans have argued the study doesn’t take into account an extra $50 billion directed to rural facilities included in the big spending bill. And systems such as Appalachian Regional Healthcare said there are no current plans to close any of its hospitals in the region.
But Nancy Galvagni, president and CEO of the Kentucky Hospital Association, said the fund isn’t expected to cover the Medicaid funding cuts to hospitals in the region. As a result, some are already weighing possible cutbacks in programs.
“Hospitals can’t wait until the cuts are starting to figure out how they’re going to manage,” she said. “Some hospitals may not be able to survive.”
Kentucky providers are facing a decline in Medicaid reimbursement when the law curtails a key source of funding Kentucky uses to bolster hospitals starting in 2028.
That includes state-directed payments used to raise reimbursement to average commercial rates, instead of the Medicaid rate that covers only 82% of costs, and provider taxes that fund those by triggering federal matching funds, Galvagni said.
Harrison Memorial Hospital Chief of Strategy David Asher told the publication Tradeoffs, a nonprofit health care publication, that his Cynthiana, Kentucky hospital was already looking for ways to cut $2 million a year and make choices about what services it can afford to provide.
“I mean, will we survive? I’m pretty confident that we will,” Asher said. “But will we be operating like we do today? Chances are high that we’re not going to be.”
Traditional money-losing services for many hospitals include obstetrics, behavioral health and cancer centers, Galvagni said.
Galvagni said her group is working with state congressional representatives to seek a delay or an increase in the state’s low federal Medicaid reimbursement rate, which is based on cost of living and impacted by Kentucky’s higher poverty rates.
Another worry is the potential knock-on effect in many Eastern Kentucky communities, where hospitals are among the biggest employers and big contributors to the local economy.
The Kentucky Hospital Association says new restrictions on how much hospitals can get reimbursed could endanger 20,000 jobs, losses that would land disproportionately hard in Eastern Kentucky.
Rogers, the area congressman, said in a statement provided to USA TODAY that “additional funding may be necessary here in Kentucky.”
“As reconciliation work continues, along (with) the appropriations for fiscal year 2026 and beyond, I will continue to work toward securing necessary resources for healthcare in Kentucky’s Appalachian region,” he said.
Still, there are a lot of unknowns.
In Breathitt County, Susie Morgan, CEO of the Kentucky Rivers Medical Center, said she believed that impacts from cuts were several years awa. She said the hospital is looking for ways to bolster its finances, such as using the Kentucky Rural Hospitals Loan Program.
How big a bite the law takes on enrollment, which also impacts provider finances, could depend on how states enact regulations and systems around the law, such as defining what is considered “able-bodied” and the disabilities or other conditions that qualify for exceptions to the requirements, according to Gerard Anderson, a Health Policy professor at Johns Hopkins.
And how states design eligibility verification systems – whether they pile on red tape or find ways to automate much of the process – could blunt or sharpen the law’s impact, Pugel said. States, including Kentucky, are waiting for federal guidance to be issued by year’s end, Pugel said.
Either way, those systems are expected to be costly.
In Georgia, the only state that currently has a Medicaid work requirement, most of the $54.7 million spent by September 2024 went to administering it, with just $19.5 million of that spent on health benefits, according to figures provided by the state community health department and previously reported by USA TODAY.
Ultimately, Galvagni said she wants people to realize the effects go beyond people on Medicaid.
“If a hospital because of these cuts in reimbursement can no longer maintain a service, that service goes away for everyone, not just people on Medicaid,” she said.
Will Medicaid give Democrats a new foothold?
On a hot August night, members of a Perry County Democratic women’s club clustered around tables in an aged Victorian mansion perched on a hillside in Hazard, decorated with ornate wallpaper, paintings and antiques. A table held platters of sandwiches.
Ned Pillersdorf, a lawyer who said he decided to run for office because of cuts to Medicaid, stood up to speak.
Pillersdorf, best known for his role in defending striking coal miners in 2016 and representing residents who said they’d unfairly lost Social Security benefits after attorney Eric Conn was charged with orchestrating $550 million in Social Security fraud. Conn was convicted after being captured in Honduras after six months on the run. His story is detailed in the four-part AppleTV+ series, “The Big Conn.”
On this night, Pillersdorf cast the work requirements as a bureaucratic tripwire designed to push people off the rolls, one masquerading as a reasonable requirement. “A lot of vulnerable people are going to lose their benefits,” he said.
“Republicans have made the cynical and probably correct assumption that the Medicaid people who are going to lose their benefits, they don’t vote and they don’t give money to political action committees,” he said.
It may be an uphill campaign in a region solidly behind Trump and where Rogers, who has served in Congress since 1981, sailed to reelection uncontested in 2024 and beat a Democratic challenger in 2022 with 82% of the vote.
But Pillersdorf and other Democrats are hoping cuts to the social safety net will provide a new political foothold.
And they come amid other cuts and added requirements to safety-net programs including Supplemental Nutrition Assistance Program (SNAP), or food stamps. Earlier this year, The Trump Administration laid off the entire staff of the Low Income Home Energy Assistance Program (LIHEAP).
A national poll earlier this year from KFF found 61% of Republicans, 71% of independents and 83% of Democrats see Medicaid as important to their communities.
“I take questions and answers everywhere I go,” he said. “I’d say 90% of the people talk to me about the big, ugly bill and the Medicaid cuts.”
While Missouri U.S. Sen. Josh Hawley warned in an op-ed that cutting healthcare to the working poor was “morally wrong and politically suicidal,” Kentucky’s long-serving U.S. Sen. Mitch McConnell said voters would “get over it,” Punchbowl News reported.
Whether voters will levy a political price is far from clear.
Michael Shepherd, who studies health management and policy at the University of Michigan, recently examined who voters held responsible for rural hospital closures. He found that in states where Republicans chose not to expand Medicaid – home to 80% of hospitals that closed since the Affordable Care Act passed – voters blamed Democrats and the ACA.
“There’s a lot of research that shows voters often struggle to assign responsibility correctly, especially when policies have complex, delayed effects,” he reported.
At the Hazard gathering, Ronnie Collins, president of the Perry County Young Democrats, said many people he’s spoken in the health care industry downplayed the potential fallout. Collins shook his head.
“People already don’t want to go to the doctor around here. Anything at all that’s gonna make it harder, you’re not gonna go. I’ve been begging dad to go for years. Go to the dentist, go to the doctor. Anything happens to his insurance, or, God forbid, the hospital up here shuts down, he ain’t gonna drive to go to a doctor,” he said.
Drug treatment facilities brace for change
As the sun was setting behind framed mountains just past 8 p.m. at Beacons of Hope, a dozen women sat in cushy arm chairs in a main living room. They went around the room, one by one, to express gratitude as part of their recovery.
They thanked God, drug courts, relatives and treatment staff.
“I’m grateful for Malachi,” Kassondra Smith, 40, said of her 9-year-old son, and those taking care of him while she was in treatment for addiction to drugs.
Outside, men emerged from a gray-sided group home to smoke cigarettes amid a day of addiction meetings, peer support, dinner, chores and study. The residential treatment program works to transition residents to stable jobs and education.
Throwing a game of corn hole was Howard Carr, 50, the son of a coal-miner. He said his addiction had caused job losses and a wreck that led to lasting health problems. Like almost everyone else, Medicaid was paying for his treatment.
While drug treatment was made an essential health benefit for many insurance plans under the Affordable Care Act, Medicaid expansion helped expand treatment to low-income adults who couldn’t afford private insurance. Treatment options skyrocketed in Kentucky. A study in 2024 found Kentucky had the most residential treatment beds per capita.
In 2023, Kentucky spent more than $800 million for substance abuse treatment. In 2023, Kentucky saw 1,984 overdose deaths, a 9.8% decline from 2022.
But there have been problems, too. The FBI has investigated Kentucky company Addiction Recovery Care, the largest provider, on health care fraud allegations. No criminal charges have been brought against the company, the Courier-Journal, part of the USA TODAY Network, reported last year. More recently, the Lexington Herald-Leader reported that Addiction Recovery Care cut staff and closed some centers, citing reduced payment for behavioral and mental health care services in Kentucky.
Burke, the executive director of Beacon of Hope, said he understands wanting to cut spending on Medicaid. But he argued that treatment pays off compared to costs to the criminal justice system and the unreimbursed emergency room costs that often follow addiction.
And he worries those facing addiction are least equipped to handle documenting their eligibility for Medicaid, especially in the month prior to qualifying and getting treatment.
“They’re not going to do that,” he said, noting he’s also working to figure out ways to get people help with it once it kicks in.
But finding a way to meet those will be critical to turning around lives. And for a case study in that, he points directly to Caudill, who now works at the treatment center doing maintenance and helping others as they recover.
After spending months in a FEMA trailer following devastating floods last winter, Caudill moved into a low-income apartment in a hollow outside of town with his partner, Cassie Collins, 31, a waitress who is recovering from substance abuse.
With them on a recent day at his apartment, not far from where dozens of vehicles waited in a long line at a food pantry, was his stepdaughter Isabella, 9, and son, Kash, 2. Their other children were with a relative.
Caudill said he knows he has finally turned the page. He’s got a car. He’s made amends to his aunt from whom he stole for his habit. He is working to build his own house painting business, Kash Money Painting, named after his son. He started to shoot baskets again.
“I’m trying to make up for everything, he said. “I’ve come a long way in the last couple years.”
And he now has private health insurance through his job at Beacons, thanks, he says, to the leg-up from Medicaid that he credits with saving his life.
He just hopes many others who need help get the same chance.