Hospitals in the countryside across the United States are in deep trouble. A new law, called the One Big Beautiful Bill Act (OBBBA), is making it much harder for these hospitals to stay open. Because of the extra money problems caused by this new law, more and more rural hospitals are closing or cutting services. This is putting the health of millions of people who live in these smaller towns at risk.

Why are Rural Hospitals Closing?

Rural hospitals are running out of money fast. Almost half of them already report losing money every year. The OBBBA, which became law on July 4, 2025, is adding to these problems, by cutting Medicaid spending by approximately $1 trillion over ten years, which is expected to disproportionately affect rural hospitals.

What the One Big Beautiful Bill Act Does

The OBBBA brought in new rules that hurt rural healthcare. It requires people on Medicaid to work 80 hours a month to qualify. It also makes them check their eligibility every six months. These laws were specifically designed to ensure a reduction in Medicaid recipients. Experts predict that these new rules could make 1.8 million rural residents lose their Medicaid health insurance by 2034. This means many people will have no way to pay for doctor visits or hospital care.

The people being kicked off of their Medicaid aren’t necessarily people who are ineligible for Medicaid, either. The law is designed to create paperwork hurdles such that even eligible people will have a hard time fulfilling the reporting requirements and will lose coverage. The money saved by kicking people off Medicaid will go to the large tax breaks given to the wealthy and large corporations, by the OBBBA. 

Big Problems for Rural Towns

These consequences are serious for small towns. Many residents find it hard to meet the strict work rules, for instance because they don’t have good internet access (broadband) or they work seasonal and informal jobs. Important reports show that Medicaid and CHIP (another program for children) are vital for 20% of rural adults and 40% of rural children. Losing this coverage makes these families much more vulnerable.

A False Offer  $50 Billion 

The government did create a $50 billion fund called the Rural Health Transformation Fund to help. But they knew it was not nearly enough to cover the huge financial losses caused by the new law. It’s predicted that 55 more independent rural hospitals could still run out of money, which will affect medical care in places where these hospitals are often the only doctors and nurses around.

Why Medicaid is So Important

For rural hospitals, Medicaid pays for about 20% of the care they provide. The cut in these payments is a major hit to a system that is already struggling. Groups like the National Rural Health Association say this cut increases the chance that more hospitals will close. Even if they don’t close entirely, they are likely to close departments (like maternity wards), cut staff resulting in longer waits and less care, or cut pay for staff, which encourages doctors and nurses to leave and move to places where they can get paid better.

Wider Community Effects

When a rural hospital closes, it hurts the entire community. Not only do people lose access to medical care, but the hospital is often one of the biggest employers in the area. The American Hospital Association warns that closures will mean lost jobs and a weaker local economy.

Summary

The “One Big Beautiful Bill Act” (OBBBA) provided significant and permanent tax cuts for wealthy individuals and corporations, estimated to be worth over a trillion dollars for the richest 1% of Americans over a decade. To fund those tax cuts, it took money from Medicaid, among other things, putting rural healthcare and hospitals at risk.