First Trump cut Medicaid — now hospitals brace for more 'harm' coming

U.S. President Donald Trump speaks during an event after signing an executive order renaming Lake Ontario as Lake America in the Oval Office at the White House in Washington, D.C., U.S., August 27, 2026. REUTERS/Evan Vucci

When President Donald Trump’s One Big Beautiful Bill Act slashed hundreds of billions from Medicaid, hospitals thought the situation was already bad. But according to new reporting by Politico, hospitals are now bracing for new regulations from the administration that will cut even deeper, and experts warn it could cause widespread “harm” to patients.

Last year, when Republicans passed the OBBB Act, it began a process that will extract roughly $1 trillion from Medicaid over the next decade. Now, as Politico explains, “Two recently proposed rules from the Centers for Medicare and Medicaid Services would cost hospitals hundreds of billions of dollars more.” The rules target taxes states use to get more federal Medicaid dollars and which yield higher payments to hospitals. According to hospitals, if the proposed rules are finalized, they lose hundreds of billions of dollars more, forcing them to “reduce services, lay off workers, consolidate operations or shutter entirely.” Many report that they’re already cutting staff and reducing hospital beds in preparation for predicted losses.

“Our core message to CMS is to stick to the statute. Congress cut enough,” said Robert Nelb, director of policy at America’s Essential Hospitals, which represents hospitals serving large Medicaid populations. “There’s no need to cut any more out of the Medicaid system at a time when the safety net is really struggling.”

As Politico explains, “States fund Medicaid by putting in some of their own money, which the federal government then matches. Congress cracked down on a practice in which states boost their federal matching funds by taxing hospitals to inflate the state portion of the Medicaid budget and then kick the money back to the hospitals in the form of higher payments. Congress also restricted how states directed payments to certain providers, such as boosting payments for those in rural areas. Hospitals say CMS’ rules restricting state taxes and payments go further than what Congress intended. Hospitals expected to lose $340 billion through 2034 after Congress passed the One Big, Beautiful Bill Act last year. If the rules are finalized as proposed, they would generate $756 billion in savings to the federal government and $265 billion in savings to states through 2035. Or as hospitals see it, they’re losing $681 billion more than they expected.”

It is not known when the new rules will go into effect, and for now Politico notes that the potential “harm” to patients is hyopthentical, but “hospitals say they’re already making changes that could affect patient care.” For example, the hospital system Providence has begun cutting staff and supply contracts to make room for a predicted $1.3 billion hole in its budget. And Golden Valley Memorial Health Care, a hospital system in rural Missouri, has been forced to cut maternal beds in half. As that system’s CEO explained, “This is the most challenging economic time I’ve ever seen.”

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