BELLEFONTE — President Donald Trump signed the “big, beautiful” budget bill into law last week, celebrating it as a win for taxpayers and a fulfillment of key campaign promises.
Supporters of the federal package say it reduces government spending and adds protections to programs. But in rural Pennsylvania — where hospitals operate on thin margins and Medicaid helps keep the lights on — critics warn the cuts and new requirements will burden states with paperwork, make it harder for patients to access care, and push health facilities to their breaking point.
The law cuts federal Medicaid funding by roughly $1 trillion over the next decade. It also imposes work requirements and mandates eligibility verification every six months rather than annually. Many provisions in the law, like the Medicaid funding cuts, won’t go into effect until after the 2026 election.
About 3 million people in Pennsylvania — 23% — are covered by Medicaid, according to state data. More than 737,000 Medicaid recipients live in rural counties, where residents are typically older and more reliant on government-funded insurance programs. Such programs reimburse at lower rates compared to private insurance companies and haven’t kept pace with inflation.
Nicole Stallings, president and CEO of the Hospital and Healthsystem Association of Pennsylvania, said in a statement in early July that the deep reductions will “devastate” access to care, leave hundreds of thousands without insurance coverage, and “destabilize” hospitals already struggling to keep services open.
“Our rural hospitals are financially at the brink, and so any reductions in funding could really send them over the edge,” she told Spotlight PA during a June interview. “That means a reduction in service and potential closure. That’s not just going to impact 3 million Pennsylvanians. That will impact every community around that hospital.”
Once a facility ends a service or shuts down, it rarely reopens, she added — though Sharon Regional Medical Center in rural Mercer County is a unique exception.
On average, Pennsylvania hospitals absorb a loss of 18 cents on the dollar for care provided to Medicaid patients, according to the Hospital and Healthsystem Association of Pennsylvania, which represents more than 230 hospitals statewide. In rural communities, the average loss is 26 cents on the dollar.
“We didn’t just suddenly arrive at this place,” Stallings said. “Our hospitals have been chronically underfunded by Medicaid.”
That funding gap has driven many rural health systems to consolidate with other networks and expand into new areas to stabilize their finances and diversify their patient base. It’s the strategy behind Penn Highlands Healthcare — a nonprofit with nine rural hospitals — expanding into Centre County, president and CEO Steve Fontaine told state lawmakers last year.
For weeks leading up to the bill’s final passage in Congress, advocates warned that deep cuts would result in more uncompensated care because patients can’t afford to pay. The added cost would then cause hospitals and other rural health facilities to shutter core services — such as medical, dental, or behavioral health — or close.
The law earmarks $50 billion for a rural health care grant program between fiscal years 2026 and 2030, but a spokesperson for Pennsylvania’s Department of Human Services, which administers the Medicaid program, told Spotlight PA those dollars won’t fill the “massive gap” created by the federal funds.
Health policy research firm KFF estimates that rural areas nationwide will lose $155 billion in federal Medicaid funding over 10 years.
The Pennsylvania Association of Community Health Centers — which represents facilities that provide care regardless of someone’s ability to pay — said it’s working with rural providers and state officials to determine how best to navigate the federal changes.
By 2034, the law will have caused 11.8 million more people in the United States to be without health insurance, according to estimates from the nonpartisan Congressional Budget Office. An analysis by Princeton University’s State Health and Value Strategies program predicts almost 8.7 million people will lose their coverage nationwide, 340,000 Pennsylvanians among them.
Meanwhile, the Shapiro administration has estimated that 310,000 Pennsylvanians will lose their Medicaid coverage, also warning that the commonwealth — still without a final budget — won’t be able to cover any cuts made at the federal level.
In fiscal year 2023, the year with the most recent data, Medicaid spending in Pennsylvania totaled almost $44 billion. The federal government provided nearly $28 billion of those dollars. Estimates of how much federal Medicaid funding Pennsylvania will lose over 10 years range from $51 billion to $53 billion.
Lisa Davis, director of the Pennsylvania Office of Rural Health, said one thing is certain: A surge in people losing Medicaid coverage will place significant strain on hospitals and clinics across the state — ultimately leading to poorer health outcomes in every community.
“The ripple effect across the state and across the country is going to be huge because there’s this direct correlation to having insurance and accessing care, or having a way to pay for care,” Davis told Spotlight PA.
Ned Balzer — who joined a protest outside Republican U.S. Rep. Glenn Thompson’s Bellefonte office ahead of the U.S. House’s vote on the Senate’s version last week — shared concerns about the cuts and worried about what it would mean if millions of people lost their coverage.
“I don’t think that people realize how many people would be affected,” he told Spotlight PA. “And I think the people who are being affected don’t realize how they’ll be affected.”
Thompson, who has a background in health care services and represents one of the most rural districts in Pennsylvania, ultimately voted for the bill, calling it a “victory for rural America.”
“Changes to Medicaid were made to ensure the long-term stability of the program by enforcing work requirements for able-bodied adults, while preserving it for those who need it most, mothers, children, seniors, and those living with disabilities,” Kelsey Holt, Thompson’s communications director, told Spotlight PA.
U.S. Rep. Brian Fitzpatrick, who represents a district spanning Bucks and Montgomery Counties, was one of two GOP lawmakers who opposed the legislation. While he initially voted in favor of the package in May, Fitzpatrick said that deeper Medicaid cuts later approved by the Senate changed his mind.
“The original House language was written in a way that protected our community; the Senate amendments fell short of our standard,” he said in a statement.
