Washington, D.C. — More than 400 hospitals across the country face a real risk of closing or cutting essential services because of the sweeping Medicaid reductions in the federal budget law signed last year, according to a new analysis released Tuesday by the progressive watchdog group Public Citizen.
The report identified 446 at-risk hospitals — facilities where Medicaid and similar low-income programs make up at least 20% of revenue and that have been running at a financial loss in recent years. At least one at-risk hospital was found in 44 states and Washington, D.C.
For nursing homes, the stakes are direct. Hospitals are the primary feeder for skilled nursing admissions. When hospitals close or cut services, that patient flow stops — and for facilities already operating on thin margins, fewer post-acute referrals can tip the balance.
A Trillion-Dollar Squeeze
The Medicaid cuts embedded in the so-called “Big Beautiful Bill” are set to total roughly $1 trillion in reduced federal funding over the next decade. The more severe provisions — including first-time work requirements for adults and limits on how states finance their Medicaid programs — are scheduled to kick in between 2027 and 2028.
“We’re seeing hospitals that are already under severe financial strain having to make decisions about how to stay financially solvent,” said Eileen O’Grady, the report’s author at Public Citizen. “That has pretty clear implications for people who live in that community. It also has ripple effects on other hospitals in those communities.”
The analysis draws on hospital financial data from the Centers for Medicare and Medicaid Services covering 2022 through 2024 — roughly 95% of U.S. hospitals. The group stopped short of projecting exactly when closures might happen, but the picture it paints isn’t reassuring.
Who Gets Hit Hardest
About 60% of the at-risk hospitals are in urban areas, pushing back against the assumption that Medicaid cuts primarily threaten rural communities. The report found that Black and Latino patients would bear a disproportionate share of the harm.
California, New York, Illinois, and Washington have the highest concentrations of vulnerable hospitals. Notably, Republican-represented congressional districts account for 196 of the at-risk facilities, and Senate Republicans collectively represent states with 146 of them.
Hospital systems have already started responding. Trinity Health projected a $1.5 billion loss from recent and coming government policy changes and has announced layoffs and scaled-back services. Alameda Health System in Oakland, which gets 60% of its revenue from Medicaid, cut nearly 300 positions.
The Nursing Home Connection
Nursing homes rely on Medicaid for roughly two-thirds of their revenue on average — a figure that makes federal reimbursement policy an existential issue. Industry analysts have warned that each new round of health care cuts creates cascading pressure on already-strained operators.
When hospitals lose funding, they cut services, delay discharges, or close units. That reduces the referrals that fill skilled nursing beds. Fewer admissions mean less revenue. And in the current environment, less revenue rarely means belt-tightening — it often means facility closures.
“When hospitals close, patients have less access to the care that they need,” said Gideon Lukens of the Center on Budget and Policy Priorities. “They have to travel further or wait longer.”
For nursing homes watching the Medicaid situation unfold in Congress and in state capitals, Tuesday’s report is another reminder of how fragile the entire care continuum has become.
