The report says 41 percent of the nation's 2,200 rural hospitals already lose money and any revenue loss "will further weaken their tenuous financial position." It estimates that the proposed cuts to Medicaid would push the percentage of rural hospitals operating in the red up to 48 percent. Further, it says hospitals will be forced to cut employees and costs to adjust to the decreasing revenue.
Most of the Medicaid cuts would come from phasing out the extra funding for the Medicaid expansion. Under the ACA, the federal government pays 90 to 95 percent of expansion funding. The House bill phases this out in 2020; the Senate bill keeps it until 2021, but then cuts it back to the traditional Medicaid level over the following three years. The federal government pays an average of 57 percent of Medicaid costs, but the rates vary between 50 and 75 percent, with poor states getting a higher percentage.
Long-term cuts to Medicaid would come from a change in how traditional Medicaid funding is calculated. Both bills would move funding to a formula that is based on population instead of reimbursing a state a percentage of what it spends, based on a formula that gives poorer states more money. The Senate bill could change on that point to get the votes needed for passage.
"Both pieces of legislation make significant cuts to Medicaid, which will have far reaching implications for the neediest communities and the providers who serve them," Michael Topchik, national leader for the Chartis center and senior vice president at iVantage Health Analytics, said in a news release.
The Congressional Budget Office estimates that by 2026, Medicaid spending under the Senate bill would be 26 percent less than projected under current law; the House bill would reduce it by 24 percent.
States that chose to expand Medicaid under the ACA would see nearly double the cuts in states that did not; states with larger Medicaid programs and larger rural populations would see a greater impact from the proposed cuts.