SPRINGFIELD, Mo. (KY3) -The “One Big Beautiful Bill” act signed by President Trump last summer includes nearly $1 trillion in cuts to federal health care spending over the next decade, impacting Medicare and Medicaid.
“Medicare is a program that is largely designed for senior citizens. Eligibility generally starts at age 65, unless you have severe disability,” said Dave Dillon, a spokesperson for the Missouri Hospital Association. “Medicaid, on the other hand, is a broader program. The biggest share of the program is children; it does include what we call the aged, blind, and disabled category.”
Rural hospitals could be hit hardest, since many older and lower-income patients rely on those programs.
“In our smaller communities, we are more reliant on the Medicare and Medicaid programs because many of the rural residents have income challenges and/or are aged,” said Sherry Clouse Day, VP of Finance for Mercy Critical Access Hospitals.
More than half the patients seen at Mercy Hospital in Aurora, Mo., are on Medicare or Medicaid. For every procedure or visit by patients on Medicare or Medicaid, the hospital gets partially reimbursed; around 80%, according to the Missouri Hospital Association.
“[The reimbursements hospitals receive] isn’t necessarily linked to what it costs to perform a procedure. It’s what [the federal and state governments] are willing to pay for it,” said Dillon. “And so the disparity between what cost is and what reimbursement is in those programs is pretty enormous.”
President Trump signed his “One Big Beautiful Bill” into law on July 4, 2025. In the year since, hospitals have begun to feel the effects of the federal funding cuts.
“We’re a June 30 year-end, so in FY27, we expect the impact on this facility for Medicaid cuts to be $1 million,” said Clouse Day. “And that is based on the timing of when these programs are implemented, which is a partial year for our FY27. So $1 million is the least it’s ever going to be in a particular year.”
“When you have significant under-reimbursement and other programs, I mean, the old saying goes, no margin, no mission,” said Dillon. “That margin allows them to reinvest in their organizations and in their infrastructure. And when you don’t have it, that’s where you get hospitals that are suddenly struggling to remain viable financially.”
The Eureka Springs Hospital in Eureka Springs, Ark., is in a unique position. It’s one of only 44 hospitals in the United States designated as a Rural Emergency Hospital, or REH. They get fully reimbursed for their Medicare and Medicaid expenses plus 5%. The hospital’s CEO, Tiffany Means, says that they’re going to feel the effects of the new Medicaid eligibility requirements it takes to qualify for Medicaid.
In June, the Centers for Medicare & Medicaid Services published the Interim Final Rule on Medicaid work requirements. Adults ages 19 to 64 must document 80 hours per month of work, education, or community service to maintain their Medicaid coverage.
“When Medicaid recipients lose coverage, and then they have an emergency, and they don’t have any insurance, that’s where the self-pay and charity care come in,” said Means.
“An individual that has no capacity to pay, they’re not in those programs, often can either fall into a charity care opportunity for a hospital, or the hospital writes that off as bad debt,” said Dillon.
And for hospitals that only receive partial reimbursement for Medicare and Medicaid patients, they may feel extra financial strain due to the new Medicaid work requirements.
“One of the changes that is happening under Medicaid is the eligibility requirements. So that’s what’s driving a lot of the funds out of the program; it’s that they’re changing eligibility requirements,” said Clouse Day. “We have some folks who have been covered under Medicaid that will no longer be eligible, because it may be a situation where they’re not working; administratively, they can’t prove it; the hoops with which they have to jump are more difficult for them to prove that they still need the coverage. And so, they’ll no longer be covered. So that becomes uncompensated care to the rural hospitals. Then in turn, more uncompensated care means we are challenged to continue to provide all those services.”
Rural hospitals have been evaluating how they can best continue to serve their communities while operating on a tighter budget.
“We evaluate what services the community needs; which ones can we provide sustainably; what services are we providing today that we can no longer provide sustainably,” said Clouse Day. “So that evaluation of services that we provide, how we provide them, is a constant.”
Eureka Springs Hospital is developing what they call a hybrid ER/Urgent Care that would allow patients who are no longer on Medicare or Medicaid to see a physician at a lower price, instead of driving elsewhere for immediate care.
“If you’re not feeling great and you have a lower level of sickness, you don’t have to worry about paying an emergency room price,” said Means. “We’re going to reduce that cost to an urgent care price for you, so it makes it more affordable for you, and you can stay close to home. My vision is that ESH becomes the proof of concept that rural healthcare doesn’t have to be defined by what it lacks; it can be defined by what it builds.”
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