Community Health & Wellness

Impact of Medicaid reductions will reach far beyond those covered by Medicaid

Posted on July 14th, 2025 By: Conor Wilson

A surprising number of people thought Mason General Hospital would close in the days after Donald Trump signed his so-called One Big Beautiful Bill into law. The hospital’s inclusion on a federal list of financially vulnerable rural hospitals, CEO Eric Moll says, probably didn’t help.

Moll has spent much of his time since the bill passed allaying concerns about the Shelton hospital’s immediate future. For now, the situation is stable. The most consequential provisions of the sweeping Republican tax bill do not begin taking effect until after the 2026 midterms elections.

“At the same time, this does further add a lot of stress to a very stressed health care system,” he said “So, eventually this really will have some pretty dire consequences.”

Mason General Hospital in Shelton.

Delayed consequences

The exact magnitude of the bill remains somewhat uncertain, providers say, as they continue to read through the details of the nearly 900-page bill that became law this month.

Long-term outlooks, though, suggest the effects could be catastrophic. Millions of Americans, including hundreds of thousands of Washingtonians, are expected to lose insurance coverage. Hospitals and other providers, particularly in rural communities, could be left in financially vulnerable positions that could necessitate service cutbacks, layoffs or even closures of entire facilities.

Washington, which embraced expanded Medicaid programs, is expected to be among the hardest hit. KFF, a nonprofit health policy research organization, estimates the state could see a 26% decline in coverage by 2034.

The cuts would impact everyone, not just Medicaid enrollees. As the uninsured population grows, the sudden rise in uncompensated care would disrupt budgets for hospitals, medical providers and the state.

“There is no way we can absorb this level of cuts in the Medicaid program without massive impacts to all Washingtonians’ access to care,” Cassie Sauer, CEO and president of the Washington State Hospital Association, said in a statement. “These provisions jeopardize the health care system for everyone. Important hospital services will disappear, nurses and doctors will be laid off, and several Washington State hospitals are at risk of full closure.”

Work requirements

An estimated 11.8 million Americans are expected to lose their insurance by 2034 as a result of the One Big Beautiful bill, according to preliminary estimates by the nonpartisan Congressional Budget Office. The bill is “in effect” a partial repeal of the Affordable Care Act, Larry Levitt, executive vice president for Health Policy for KFF, said during a call with reporters.

“The scale of changes to the health care system are staggering,” Levitt said. “But the law is complicated and few of the provisions are direct cuts in Medicaid or ACA benefits or eligibility, though they would have that effect indirectly.”

The landmark ACA drastically reduced the number of American who were uninsured by expanding access to Medicaid, the state-federal insurance program for Americans on low incomes or with disabilities. To finance its tax cuts, the Republican bill rolls back many of these gains.

Medicaid spending will be cut by nearly $1 trillion over the next decade. That reduction would be achieved primarily by pushing recipients off the program through work requirements. Starting as early as 2027, everyone enrolled in Medicaid through an ACA expansion must prove they worked, volunteered or went to class 80 hours per month, or have an exemption.

The vast majority of people enrolled in Medicaid are working or going to school. These requirements are not expected to increase the number of working adults. But Medicaid recipients may still lose their insurance — not for being unemployed, but for failing to comply with the administrative process and reporting requirements.

“The savings in the bill are counting on people dis-enrolling from Medicaid as a result of these requirements,” said Monica Berhard, CEO of Kitsap Mental Health, an agency that serves 6,000 individuals facing mental illness, mostly covered under Medicaid. “As a community we can’t let that happen.”

People who lose their insurance will not stop getting sick, Berhard said. But instead of dealing with physical or mental health issues in a preventative way, which is most cost effective, they are more likely to seek out care in hospitals and inpatient units during emergencies.

“Whether it’s general health care or behavioral health care, we’re gonna be dealing with it more in crisis situations,” she said.

Medicaid coverage

Medicaid covers the cost of care for a range of services, including substance use treatment and nursing homes stays. It is particularly valuable for rural areas, where enrollment tends to be higher, but all hospitals and most nonprofit providers rely on it as a revenue stream.

About a quarter of Mason General Hospital patients are covered through Medicaid, including three-fourths of its deliveries. Recipients tend to be disproportionately young, working families who do not have access to insurance through an employer.

Researchers from Cecil G. Sheps Center for Health Services Research at the University of North Carolina, who studied the impacts of the One Big Beautiful Bill, estimate that Mason General has among the highest Medicaid payor rates in the country. It was one of over 300 rural hospitals across the United States – and 14 in Washington state – identified as at risk of financial distress, service disruptions and even closure.

The Republican bill includes a temporary $50 billion earmark for a rural health fund, intended to prevent closure of rural hospitals. Yet both Sauer and Levitt say it is an inadequate replacement for the cuts to Medicaid and the ACA, which are permanent, and add regulatory hurdles.

“Offering this as a solution is like punching someone in the face and then offering them a Bandaid,” Sauer said.

A spokesperson for Virginia Mason Franciscan Health, the owners of 10 Puget Sound hospitals including St. Anthony Hospital in Gig Harbor and St. Michael Medical Center in Silverdale, declined to immediately comment on the bill and defered to comments made by the Washington State Hospital Association.

Hospitals on the Kitsap Peninsula get around 11-13% of their annual revenue from Medicaid, according to state data. That is less than most, particularly east of the Cascades, but it still represents a significant source of revenue.

“This will have a very serious, very negative financial impact to all hospital not just rural ones,” Moll said

Turning to the state

Jennifer Kreidler-Moss, CEO of Peninsula Community Health Services, said her agency has deep concerns about the impacts of the One Big Beautiful Bill. PCHS provides primary care to people in Kitsap, Mason and rural Pierce counties regardless of their ability to pay.

Many individuals will lose insurance coverage, she said, and funding to address community behavioral health and basic physical health needs will no longer be available.

“PCHS will continue to be available to all patients regardless of their insurance status or lack thereof,” she said. “But more than ever, it will be up to our state and local policymakers to decide to prioritize limited funds to fill these new and continuing gaps in healthcare as so many other needs exist.”

State leaders have already pledged to backfill losses of about $11 million to Planned Parenthood, should cuts to the agency in the One Big Beautiful bill survive a pending lawsuit. Yet other gaps remain and its ability to cover all of the losses sustained to Medicaid is dubious.

Washington is expected to see a federal reduction in Medicaid spending of $36 billion over the next decade, according to a KFF analysis. That is a 17% reduction, the highest in the country.

“It is impossible to overstate just how devastating this legislation will be for Washingtonians,” Gov. Bob Ferguson said in a statement. “This morally bankrupt decision will cause our most vulnerable Washingtonians to lose their health care coverage and likely force hospital closures across the state, all to pay for tax breaks for the richest Americans.”

Charity care

Moll said changes could be on the horizon for the state’s charity care law, a statute requiring hospitals to care for everyone regardless of their ability to pay.

As the number of uninsured patients has dwindled, in large part due to the ACA, the state’s charity care program has been expanded. Hospitals have been mandated to provide more preventative and primary care service to uninsured patients. Before the ACA, offering this level of care would have almost certainly bankrupted hospitals, Moll said. Too many people were without insurance for it to be financially sustainable.

As gains from the ACA are rolled back and more people lose insurance, hospitals will not be able to operate with the same standard long term, Moll said. Emergency services would still be part of charity care. But the state would need to pay for the added cost of preventive services to make it sustainable for hospitals, Moll said.

“It’s a horrible conversation because the reality is the state doesn’t have the money to pay for that policy,” he said. “The hospitals can’t and — the health systems can’t – continue to operate long term with this policy.”