As we at the Prospect have reported, while the Senate’s version of the Republican budget reconciliation bill was widely expected to be more moderate than the House one, when it comes to health care it is more extreme. This came as a surprise to many Republicans, some of whom now want changes. And they all are highlighting the same area of concern. It would be “potentially really bad for rural hospitals,” Sen. Josh Hawley (R-MO) told The Wall Street Journal. It’s “going to hurt our rural hospitals and hurt them in a big way,” said Sen. Jim Justice (R-WV). Sen. Susan Collins (R-ME) expressed “concerns about the effect on rural hospitals in her state.”

This is all certainly true. Senate cuts to the provider tax, a way for states to get more federal funding for their Medicaid programs, along with the House cuts that have been analyzed as leading to at least 11 million fewer people on the Medicaid rolls, will deeply harm the 700-plus rural hospitals already at risk of closure.

But that’s too narrow a frame. The entire health care provider network would come under heavy strain, and possibly collapse.

That’s because each node of the system is interdependent. If the 190 rural hospitals estimated in a recent Center for American Progress report as collateral damage of the Republican cuts close, all of their patients must find treatment at the remaining health care providers. Many of these new-arrival patients are likely to be uninsured (many thrown off Medicaid or Obamacare by Republicans), crushing hospital finances and potentially adding more closures on top.

This means overcrowded hospitals and overburdened staff, in addition to the serious hardships for patients traveling long distances for care. “The Republican Senate budget accelerates the rural hospital collapse that is under way, like jet fuel on a fire,” said Alex Lawson of Social Security Works, who works directly on health care issues in Washington. “Hospitals that don’t close will be the ones people drive four hours to access. The quality of everybody’s health care in this country will plummet.”

HOSPITALS HAVE LURCHED FROM ONE CRISIS to the next for years. Between the 2020 COVID pandemic and 2024, 36 rural hospitals closed, on the heels of 136 closures in the previous decade. Another 16 have closed this year, suggesting an acceleration of the trend, and hundreds more are at risk.

If the entire hospital doesn’t close, unprofitable business lines are often shuttered first. “I’ve talked to a lot of hospitals worried about having to close maternity wards,” said Chiquita Brooks-LaSure, who ran the Centers for Medicare & Medicaid Services (CMS) in the Biden administration. In California alone, 56 hospitals have ended maternity care since 2012, and the crisis of maternity deserts is acute.

The situation is worse, Brooks-LaSure said, in states that haven’t expanded Medicaid, suggesting that the program is a lifeline for hospitals, supplying a steady stream of paid claims for insured patients. Indeed, Medicaid is often the biggest line item in the accounts receivable budgets for nursing homes, rural hospitals, and maternity wards, as Families USA’s Anthony Wright pointed out to The xxxxxx. A letter to the Republican leadership citing data from the Sheps Center for Health Services Research at the University of North Carolina notes that 213 rural hospitals serve a disproportionately high share of Medicaid patients.

While hospitals sometimes complain about low Medicaid reimbursement rates, the government has in the past compensated for that with “state-directed payment” arrangements that boost levels to what commercial insurance pays. That is being attacked in the Senate Finance Committee version of the bill, cutting those reimbursement top-ups to Medicare levels.

Hospitals are legally required to take care of patients in an emergency, regardless of their ability to pay. And more emergencies occur when more people are uninsured and put off care until they absolutely need it, which are made worse still if patients have to travel for hours to get care. Uncompensated care builds up in states with larger proportions of their populations who are uninsured, severely damaging hospital budgets.

Taking nearly $1 trillion out of the health system will magnify that problem across the country. And Medicaid cuts that create more uninsured patients, along with the creation of potentially millions of uninsured through Affordable Care Act changes, are terrible for hospitals. According to the Robert Wood Johnson Foundation, uncompensated care would increase by $204 billion over the next decade if the House version of the bill passed; remember, the Senate bill is even worse. Much of that burden would be thrown onto already shaky hospitals.

To those who argue that the cuts are really to state Medicaid programs and not hospitals, the ways states will deal with those cuts is not likely to be through simply providing more money that they don’t have. They will either change enrollment rules, so fewer people stay on the program, or cut reimbursement payments to hospitals and other providers. Both of these options would directly harm hospital finances.

“These cuts will strain emergency departments as they become the family doctor to millions of newly uninsured people,” said Rick Pollack, president and CEO of the American Hospital Association, in a statement, adding that “the proposal will force hospitals to reconsider services or potentially close, particularly in rural areas.”

BROOKS-LASURE EXPLAINED WHAT IT ACTUALLY MEANS when a hospital closes, recalling a closure when she was at CMS. “The first thing we had to do is make sure people in that hospital are moved to somewhere they can get care. You might have people in serious situations, and moving them is a life-threatening proposition.”

Another factor is how the loss of an anchor hospital affects local economies. A hospital can be the biggest employer in a small town. If it closes, the entire town can wither away, straining local and regional finances and burdening the residents who don’t have the resources to move.

Over the longer term, the closure of rural hospitals forces patients to spend hours getting to the nearest care center, and in some cases leaves them without access at all. “I was in Colorado and we drove from one part of the state to the other to get to a hospital,” LaSure explained. “They said to me, ‘The road you drove over, one out of three days of the year you can’t get over that road,’” due to weather or some other complication. When the nearest hospital is across the Rockies and it’s snowing, you really have no ability to get care.

Being hours away from a hospital also means that families are more likely to avoid routine care. And in emergency events like heart attacks or accidents, distance can be the difference between life and death.

People will eventually do what it takes to get medical treatment if they need it. That means families weathering hardships like having to pay to stay overnight near a hospital that’s far from home, or dropping off a loved one and not being able to visit them during an extended hospital stay.

This also means the hospitals that are allegedly “safe” from cuts will feel the effects. They will have more patients, and more uninsured patients, to deal with. And they cannot handle the numbers they see now. There is already a projected shortage of over 187,000 physicians over the next decade, according to a November 2024 report of the National Center for Health Workforce Analysis.

“There’s no escaping this,” Lawson said. “The health system is super-complex. You can’t do something in one side and expect it’ll have no effect in the other.”

MANY IN THE HEALTH PROVIDER COMMUNITY have been raising alarms about the Republican bill. America’s Essential Hospitals, a coalition of over 300 safety-net hospitals, forwarded a message to the Prospect from its CEO Bruce Siegel, who said that “the cuts would threaten the health and well-being of millions of Americans and harm the essential hospitals that serve as community lifelines.” State hospital associations, in a letter to Senate leaders, noted that some of the payments the Senate Finance Committee attacked make up 20 percent of a hospital’s overall revenue.

As Jonathan Cohn points out, the hospitals at most risk of closure are primarily in communities dominated by Republicans at the district level. But Democratic areas are at risk as well. House Minority Leader Hakeem Jeffries (D-NY) led a “Save Our Hospitals” action yesterday at a hospital in Brooklyn. And in Los Angeles County, over 40 percent of the population is enrolled in Medi-Cal, the state’s Medicaid program, according to analysis from the Berkeley Labor Center.

Rep. Chris Deluzio (D-PA), who represents portions of rural communities outside of Pittsburgh, said he’s been hearing from hospital groups in his state. “They are struggling as it is,” he said. “If these Medicaid cuts happen, facilities and services will be on the chopping block, not just in my district but all over Pennsylvania.”

The health care system as it stands today reflects a fragmented patchwork of providers and insurance systems, which are ill-equipped to handle a shock of this magnitude. Medicaid is extremely popular because it works for poor people with no other outlet, and fills in gaps that enable many hospitals to survive. There’s no question that, as Brooks-LaSure said, the biggest damage will be incurred “in the places that are the worst for hospitals to close.” But it won’t end there, and if you think you’re insulated from the pain, you’re probably wrong.