Health Issues

In the United States, the percentage of adults seeking mental health treatment or counseling has been steadily rising.

In this article, we’ll take a look at some of the top mental health insurance considerations that consumers should understand.

Let’s start with an obvious and frequently asked question:

Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written hundreds of opinions and educational pieces about the Affordable Care Act for healthinsurance.org.

Updated: May 13, 2025

On May 11, the House Energy and Commerce Committee released draft legislative language of a bill to meet spending targets aimed at funding President Trump’s domestic priorities that includes significant changes to the Medicaid program. The Congressional Budget Office (CBO) estimates that the bill would decrease the federal deficit by more than the $880 billion over 10 years that was called for by the budget resolution passed by Congress in April. CBO preliminary estimates show that the health provisions (including Medicaid) would reduce the deficit by $715 billion over ten years and increase the number of people without health insurance by at least 8.6 million by 2034.

The following includes a summary of the Medicaid provisions included in the draft legislation compared to current law. The Energy and Commerce Committee is expected to consider this legislation in a committee mark-up on May 13, so provisions could change during that process. 

There’s been a lot of buzz in the media in early 2025 about the likelihood of Medicaid cuts to significantly reduce federal spending on the program. With almost 72 million people covered by Medicaid, ^{there is widespread concern about what sort of cuts are likely.}

This article examines what could be cut – and who the cuts would likely affect.

Why we think Medicaid cuts are likely

Medicaid cuts are making the news due to a Congressional budget proposal that calls for reducing federal spending by hundreds of billions of dollars to pay for various tax cuts. ^{Both chambers of Congress have agreed on a framework for the budget. They ultimately have to agree on details of a budget change, and we don’t yet know how that will unfold.}

But the budget framework passed by both the House and Senate directs the Committee on Energy and Commerce, which is the House committee with jurisdiction over Medicaid, Medicare, and the Children’s Health Insurance Program, to reduce the federal deficit by $880 billion over 10 years. ^{According to the Congressional Budget Office, cuts of that magnitude would have to primarily target Medicaid.}

What Medicaid cuts are being considered?

So what Medicaid cuts could Congress make, and how would they affect enrollees? While we don’t yet know what will be in the final budget bill, we do have information from the House Ways & Means (W&M) and Budget Committees, outlining various cuts, along with potential savings.

Here’s a look at five likely focus areas for Medicaid cuts:

1. Medicaid work requirements

Potential funding cut: About $100 billion over a decade

Medicaid work requirements are not a new idea. Several states received federal approval for work requirements under the first Trump administration, although most were never implemented. Georgia, which has had a work requirement in place since mid-2023 for certain adults, ^{is currently the only state that requires some enrollees to be working to qualify for Medicaid.}

If a federal Medicaid work requirement were implemented, the impact would depend on several factors, including:

• How widely the work requirement would apply (for example, only to the Medicaid expansion population, or to all adults under a certain age).
• What populations would be exempt.
• The degree to which compliance could be determined automatically versus requiring enrollees to report their work hours.

The Robert Wood Johnson Foundation estimates applying a federal work requirement just to the Medicaid expansion population could result in 4.6 to 5.2 million people losing Medicaid eligibility.

In Washington, DC, federal Medicaid funding is statutorily set at 70%. The W&M list and the Budget Committee call for this to be changed so that the funding percentage would be set the same way it is in the rest of the country, which would reduce it to 50%. ^{If the 50% minimum were to be eliminated as well, the District of Columbia could potentially be subject to additional federal Medicaid funding cuts.}

Under the Affordable Care Act (ACA), the federal government pays 90% of the cost of covering the Medicaid expansion population. This is much larger than the federal government’s share of the cost of covering the rest of the Medicaid population, which ranges from 50% to nearly 77%, depending on the state.

The House Committees ^{want to reduce the federal funding percentage for the Medicaid expansion population so that it matches the funding percentage that applies to the rest of each state’s Medicaid population. This change could save the federal government up to $561 billion over the coming decade.}

In nine states, this would result in an automatic termination of Medicaid expansion, and in three others, it would result in an automatic review process that would likely lead to coverage losses. The rest of the states would have to consider whether Medicaid expansion would continue to be financially feasible with the reduced federal funding.

Depending on how the rest of the states would handle the reduction in funding, up to 20 million people could lose Medicaid due to a reduction in federal funding for Medicaid expansion.

If a per-capita cap were to be implemented nationwide, it could potentially affect eligibility and benefits for all 72 million Medicaid enrollees. The specifics would vary from one state to another, depending on the approach each state takes.

All of the proposals discussed above would require Congressional action. But the W&M Committee also noted that federal Medicaid funding could be reduced by up to $285 billion over the coming decade by rescinding some Biden administration rules. ^{This could be} done by federal agencies and would not require Congressional action.

The first Biden administration rule is one that expands access to Medicaid Home and Community Based Services (HCBS).

The other Biden administration rule is a two-part rule that makes it easier for people who are eligible for Medicaid to enroll in the program and renew their coverage.

Medicaid cuts would result in reduced benefits and enrollment

According to the Economic Policy Institute, extending tax cuts would primarily benefit those with the highest incomes, ^{while Medicaid cuts would result in people with the lowest incomes losing benefits and coverage. And the impact of Medicaid cuts would apply disproportionately to people of color and children.}

Amid pushback on the idea of Medicaid cuts, Republican lawmakers have noted that their intent is to improve efficiency and administration in the Medicaid program, but not to cut benefits or eligibility. ^{However, the scale of federal funding cuts called for in the Congressional budget resolution would require changes like the ones detailed above, which experts agree would result in reduced benefits, fewer enrollees, or both.}

Based on historical experience, when people are disenrolled from Medicaid, the majority end up being uninsured for at least some time after losing Medicaid.

So if any Medicaid cuts are implemented, it will be important to devise a strategy that minimizes the number of people who become uninsured.

The views and opinions expressed in this blog post are those of the author and do not necessarily reflect those of HealthInsurance.org, LLC or its affiliates.

Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written hundreds of opinions and educational pieces about the Affordable Care Act for healthinsurance.org.

As the Trump administration and Congress pursue broad cuts to federal health agencies and budgets, most of the public, including some Republicans, oppose deep budget and staffing cuts to federal health programs and agencies, a new KFF Health Tracking Poll finds.

Across a range of questions, large majorities of Democrats and independents oppose the Trump administration’s major cuts to federal health agencies and programs, while Republicans are more supportive. Those who identify with President Trump’s Make America Great Again movement are even more supportive of cuts to health agency’s staff and budget but still split on cuts to funding for Medicaid and a few other programs.

For example, most of the public (61%), including large shares of Democrats (89%) and independents (67%), oppose major health spending and staff cuts at federal health agencies. In contrast, MAGA supporters overwhelmingly support such cuts (78%), while Republicans and Republican-leaning independents who don’t align with MAGA are divided (48% support the cuts, 52% oppose).

Similarly, most (59%) of the public, including large majorities of Democrats (92%) and independents (65%), say the Trump administration and its Department of Government Efficiency (DOGE) have been “recklessly making broad cuts to programs and staff.”  

In contrast, the vast majority of MAGA supporters (87%), and a narrower majority of non-MAGA Republicans and Republican leaners (57%), say that the administration is “carefully making cuts to programs and staff to reduce fraud and waste.”

On Medicaid, a contentious issue as the Trump administration and Congressional Republicans weigh budget cuts to help finance tax cuts, three quarters (76%) of the public say they oppose major federal funding cuts.

A narrow majority of Republicans (55%), as well as larger majorities of Democrats (95%) and independents (79%), oppose major Medicaid cuts. MAGA supporters are closely divided on major funding cuts to Medicaid, with similar shares in favor (51%) and opposed (49%) to major cuts.

Large Majorities Oppose Specific Cuts to Federal Health Programs and Agencies

The poll also gauges the public’s views on federal funding cuts for other health programs. In each case, more than six in 10 oppose specific federal health cuts.  For example:

• About three quarters (74%) oppose major cuts to states for mental health and addiction prevention services. This includes a narrow majority of Republicans (58%), and large majorities of Democrats (89%) and independents (75%).
• Most (71%) oppose major cuts to funding to track infectious disease outbreaks. This includes half of Republicans (51%), and large majorities of Democrats (89%) and independents (74%).
• Seven in 10 (69%) oppose major cuts to research at universities and medical centers. This includes large majorities of Democrats (92%) and independents (69%). In contrast, most Republicans (56%) favor such cuts.
• Nearly two thirds (65%) oppose reduced federal funding to help people pay the premiums for health coverage purchased through the Affordable Care Act marketplaces. This includes large majorities of Democrats (88%) and independents (65%). In contrast, most Republicans, (61%) favor such cuts.

Most of the public also opposes major staffing cuts to key federal health agencies such as the Department of Veteran Affairs (74% oppose), Centers for Medicare & Medicaid Services (67%), the Centers for Disease Control and Prevention (63%), the Food and Drug Administration (63%), and the National Institutes of Health (62%).

Republicans and MAGA supporters narrowly oppose major staffing cuts for Veterans Affairs but favor them at each of the other agencies.

Partisans See Different Drivers of Fraud and Waste in Government Health Program

About half of the public say that fraud, waste, and abuse are a major problem in Medicaid (52%), Social Security (51%), and Medicare (50%), and a slightly larger majority say it is a major problem in private health insurance (57%).

Partisans choose different groups when asked who is most responsible for fraud, waste, and abuse in government health programs. About half of Democrats (49%) say private health insurers are most responsible, while Republicans most often name government workers (42%). Fewer across partisans blame people enrolled in the programs or hospitals, doctors and other health providers.

Designed and analyzed by public opinion researchers at KFF, this survey was conducted April 8-15, 2025, online and by telephone among a nationally representative sample of 1,380 U.S. adults in English and in Spanish. The margin of sampling error is plus or minus 3 percentage points for the full sample. For results based on other subgroups, the margin of sampling error may be higher.

Key Takeaways

• Amid sweeping overhauls of federal health agencies in the first 100 days of President Trump’s second term, majorities of the public oppose major cuts to staff and spending at these agencies (61%) and say recent actions by the administration and Elon Musk’s Department of Government Efficiency (DOGE) have gone too far (54%). In addition, six in ten (59%) say the administration is “recklessly making broad cuts to programs and staff, including some that are necessary for agencies to function,” while a smaller share (41%) say “the administration is carefully making cuts to programs and staff to reduce fraud and waste, and to improve government efficiency.”
• Views of cuts to staff and spending are largely partisan with most Democrats and independents opposing the cuts and thinking they go “too far,” while a majority of Republicans support the cuts and six in ten (63%) say the extent has been “about right.” In addition, nine in ten Democrats and two-thirds of independents categorize the cuts as reckless while eight in ten Republicans think the administration is carefully making the cuts. Across the board, the strongest proponents of these cuts are MAGA supporters, a group that constitutes about three-quarters of all Republicans and Republican-leaning independents. Large majorities of MAGA supporters say they support the cuts and a quarter say the cuts haven’t gone far enough. Much smaller shares of Republicans and Republican-leaning independents whose views don’t align with the MAGA movement approve of the current actions by the Trump administration.
• Most of the public also see the negative consequences from these cuts, with majorities saying cuts to staff and spending at federal health agencies will have a negative impact on health care for veterans, research to find cures and treatments for cancer and other diseases, efforts to combat the spread of infectious diseases, and food safety. Once again, views are partisan with most Democrats and independents saying the cuts will have a negative impact in these areas while Republicans are more likely to say the cuts won’t have an impact.
• There is partisan agreement when it comes to funding cuts to Medicare, Medicaid, and Social Security with more than nine in ten Democrats, eight in ten independents, and more than half of Republicans opposing federal funding cuts to each of the three government programs. In addition, majorities across partisanship oppose funding cuts to states for mental health and addiction prevention services and for tracking infectious disease outbreaks. Another seven in ten oppose cuts to federal funding for research at universities and medical centers, including nine in ten (92%) Democrats, seven in ten (69%) independents, and almost half (44%) of Republicans. Overall, two-thirds (65%) oppose cutting funding to help people who purchase health coverage through the ACA to pay their premiums (65%), but about six in ten Republicans support major cuts in this area.
• Most of the public agree with the Trump administration that fraud, waste, and abuse are a problem in health care in the U.S., yet partisans disagree on whether the cuts will make any difference and on who is responsible for it. Roughly four in ten (43%) of the public say cuts to staff and spending at government health agencies will negatively impact reducing fraud, waste, and abuse in health care, which is similar to the share (38%) who say there will be a positive impact. Additionally, while majorities (57%) think fraud, waste and abuse are a “major problem” in private health insurance plans, fewer – about half – think fraud is a problem in Medicaid (52%), Social Security (51%), and Medicare (50%). Half of Democrats identify private health insurance companies as the group most responsible for fraud, waste, and abuse in government health programs while four in ten Republicans place the blame on government employees running the programs.

Most Oppose Trump Administration Cuts to Federal Health Agencies

The first few months of President Donald Trump’s second term have been punctuated by a wave of cuts to the federal workforce and government funded programs, especially in health care agencies. At least 20,000 jobs have been lost from the Department of Health and Human Services and its sub-agencies since Robert F. Kennedy Jr. assumed his job as secretary of the agency.

Most of the public (61%) oppose major cuts to staff and spending at federal health agencies, while two in five (38%) support such cuts. Views on the cuts to staff and spending are expectedly partisan, with the majority of Republicans supporting major cuts (72% support, 27% oppose), while nine in ten Democrats oppose the cuts (89% oppose, 10% support). Two-thirds of independents oppose the cuts (67%) while a third are in support (32%).

Support for major changes at federal government health agencies is driven by the most enthusiastic segment of President Trump’s political base – Republicans and Republican-leaning independents who identify as supporters of the Make America Great Again (MAGA) movement. This group, which makes up 75% of Republicans and leaners (31% of total U.S. adults) are demographically similar to other Republicans and Republican-leaning independents when it comes to race/ethnicity, gender, and income, but tend to be older. Roughly eight in ten MAGA-aligned Republicans say they generally support major cuts to staff and spending at federal health agencies, while non-MAGA Republicans are more divided (48% support and 52% oppose).

Perhaps a reflection of the entrenched partisan views, hearing arguments for and against major cuts to staff and spending for federal government health agencies causes few people to change their views. When those who support cuts to the agencies hear that the cuts would negatively impact these agencies’ abilities to serve the public, about a quarter change their view, dropping overall support for the cuts to agencies nine percentage points, from 38% to 27%.

When opponents of the major cuts to federal government health agencies hear that it would help save money and reduce the size and scope of the federal government, about one in ten change their view, increasing overall support eight percentage points to about half (46%) of the public, while 53% remain opposed to the change. On many health issues, polls find that arguments can lead to large shifts in opinion, but that doesn’t seem to be the case here, with majorities continuing to oppose cuts in the face of arguments for them.

Most of the public (54%) say cuts to staff and spending at federal government health agencies by the Trump administration and Musk’s Department of Government Efficiency (DOGE) go “too far” while three in ten (31%) think the cuts are “about right” and 14% say the cuts haven’t gone far enough. Republicans are largely in favor of the level of cuts at the federal government health agencies with six in ten (63%) saying the cuts have been “about right.” This is in stark comparison to the nine in ten Democrats (90%) and six in ten independents (57%) who say the cuts to health agencies have gone “too far.” MAGA Republicans are also much more likely than non-MAGA Republicans to say the cuts to staff and spending at federal government health agencies so far are “about right”, (64% vs. 46%). In fact, one-third (33%) of non-MAGA Republicans think the cuts have gone “too far.”

In addition to believing the cuts have gone “too far,” the public expresses generally negative views about the manner in which the administration has approached these cuts. Asked which comes closer to their view, six in ten (59%) say “the administration is recklessly making broad cuts to programs and staff, including some that are necessary for agencies to function,” while a smaller share (41%) say “the administration is carefully making cuts to programs and staff to reduce fraud and waste, and to improve government efficiency.” Overall sentiment on this question is largely driven by partisanship. Large majorities of both Democrats (92%) and independents (65%) say the cuts have been reckless, while this view is shared by only one in five Republicans (18%). On the other hand, eight in ten (82%) Republicans think the administration is carefully making the cuts. MAGA supporters are much more likely to say that the administration is “carefully making cuts to programs and staff to reduce fraud and waste, and to improve government efficiency” compared to non-MAGA Republicans and Republican-leaning independents (87% vs. 57%). Notably, four in ten non-MAGA Republicans (42%) say the cuts have been reckless.

There is Large Opposition to Funding and Staff Cuts at Government Health Agencies

With tepid support for cuts generally, very few also support major cuts to federal funding for specific programs such as Medicaid, Medicare, and Social Security. The House budget resolution is targeting federal cuts to Medicaid for up to $880 billion or more over the next 10 years, representing 29% of state-financed Medicaid spending per resident. Trump has promised not to cut Social Security, Medicare, and Medicaid benefits.

At least three-quarters of the public oppose major cuts to funding for Social Security (84%), for Medicare (79%), and for Medicaid (76%). Beyond these major programs, large shares of the public also oppose cuts in other areas of public health, research, and disease prevention. At least two-thirds oppose cutting funding to states for mental health and addiction prevention services (74%), for tracking infectious disease outbreaks (71%), for research at universities and medical centers (69%), for HIV prevention programs (65%), and to help people who purchase health coverage through the ACA to pay their premiums (65%). About one-third or fewer support major cuts to federal funding in each of these areas.

Views on cuts to federal health spending are predictably partisan, with about nine in ten Democrats and at least two-thirds of independents opposed to funding cuts in each area included on the survey. On the other hand, about six in ten Republicans support major cuts to federal funding to help people who purchased coverage through the ACA to pay their premiums (61%) and for HIV prevention programs (61%), while about half of Republicans support cutting funding for research at universities and medical centers (56%) and for tracking infectious disease outbreaks (49%).

But majorities of Republicans oppose major cuts to funding for Social Security (73%), Medicare (64%), and Medicaid (55%). Additionally, a majority of Republicans (58%) oppose cuts to funding to states for mental health and addiction prevention services.

Many agencies have already undergone major staffing cuts under the Trump administration, including the Department of Veterans Affairs, or VA, which announced a plan to cut 83,000 jobs in March. Majorities of the public oppose major staffing cuts at government agencies with responsibilities in health. The largest opposition is to staffing cuts at the VA, which three-quarters of the public oppose.

At least six in ten of the public also oppose cuts to staff at the Centers for Medicare and Medicaid Services, or CMS (67%), the Social Security Administration, or SSA (66%), the Food and Drug Administration, or FDA (63%), the Centers for Disease Control and Prevention, or CDC (63%), HHS Office of Infectious Disease & HIV/AIDS Policy (62%), and the National Institute of Health, or NIH (62%).

At least nine in ten Democrats oppose major staffing cuts at each of the health agencies included in the survey, while majorities of Republicans (between 58% and 77%) approve of such cuts at most agencies. One exception is staffing cuts at the Department of Veterans Affairs, or VA, with Republicans divided on the issue, with half supporting the cuts (46%) and half (54%) opposing.

Republicans and Republican-leaning independents who support the MAGA movement largely support the cuts to federal funding and staff, with a few notable exceptions.

Majorities of MAGA Republicans support major cuts to federal funding for HIV programs (66%), to help pay ACA premiums (64%), and for research at universities and medical centers (62%). About half support major cuts for tracking infectious disease outbreaks (51%), for Medicaid (51%), and to states for mental health and addiction prevention services (46%). Yet, fewer than four in ten MAGA Republicans support cutting funding for Medicare (38%) and just three in ten support cutting funding for Social Security.

When it comes to cutting staff, three-quarters support major cuts to staff at the HHS Office of Infectious Disease & HIV/AIDS policy (78%), CDC (78%), NIH (77%), and the FDA (75%). Another two-thirds support major cuts to staff at SSA (65%) and CMS (65%). Notably, less than half of MAGA-supporting Republicans (47%) support cuts to the VA.

Concerns About Fraud, Waste, and Abuse in Federal Health Programs

The Trump administration and DOGE have framed the cuts occurring throughout the federal government as eliminating “fraud, waste, and abuse”, implementing DOGE’s cost efficiency initiative. Large majorities of the public think fraud, waste, and abuse are a major problem facing our country’s health care programs, though most don’t view the problem as being limited to public health insurance programs. About six in ten (57%) think fraud, waste and abuse are a “major problem” in private health insurance plans, while about half say the same about Medicaid (52%), Social Security (51%), and Medicare (50%). Close to a third say fraud, waste, and abuse are a “minor problem” in each of these, while about one in ten say fraud, waste, and abuse are “not a problem”.

Republicans are about three times as likely as Democrats to say fraud, waste, and abuse are a major problem in Social Security (80% vs. 26%), Medicaid (75% vs. 25%) and Medicare (72% vs. 24%). There is a much smaller partisan difference in the share seeing fraud, waste, and abuse as a major problem in private health insurance, with two-thirds of Republicans (66%), six in ten independents (61%), and nearly half of Democrats (45%) sharing this view. MAGA-supporting Republicans are much more likely than non-MAGA Republicans to say fraud, waste, and abuse are major problem in private health insurance plans (69% vs. 58%), Medicaid (80% vs. 57%), Social Security (84% vs. 54%), and Medicare (77% vs. 53%).

Adults in the U.S. are divided when identifying culprits of fraud, waste, and abuse in government health programs. One in three (33%) say that private health insurance companies are most often responsible for fraud, waste, and abuse in government health programs, with a similar share (29%) saying government employees running the programs are most responsible. One in five (20%) think hospitals, doctors, and other health care providers are responsible for most fraud, waste, and abuse in government health programs, while one in six (17%) say the same about people enrolled in the programs.

Less than a quarter across partisans blame people enrolled in the programs or hospitals, doctors, and health care providers for fraud, waste, and abuse in government health programs. Instead, half (49%) of Democrats identify private health insurance companies as the group most responsible for fraud, waste, and abuse while four in ten (42%) Republicans place the blame on government employees running the programs.

The Public Is Concerned How Cuts May Impact Services, but Some Think They Will Reduce Fraud and Waste and Bring Down the Deficit

Majorities of the public believe that cuts to staff and spending at federal health agencies will have negative impacts in a variety of areas. Six in ten say these cuts will have a “mostly negative” impact on health care for veterans (62%) and on research to find cures and treatments for cancer and other diseases (60%). More than half of adults say there will be “mostly negative” impacts on efforts to combat the spread of infectious diseases like measles and bird flu (55%) as well as food safety (53%). Half believe the cuts will have a negative impact on racial disparities in health care. Fewer than one in six expect the cuts to have positive impacts in any of these areas.

While President Trump and Elon Musk have framed many of the recent cuts as necessary to curb fraud and waste and reduce the federal budget deficit, the public is divided in their views of whether these goals are likely to be achieved. About four in ten (38%) say staff and spending cuts at federal health agencies will have a “mostly positive” impact on reducing fraud, waste, and abuse in health care, but a similar share (43%) say these cuts will have a “mostly negative” impact on reducing fraud, waste, and abuse. Similarly, while four in ten say cuts will have a positive impact on reducing the U.S. budget deficit, nearly as many (34%) say they will have a “mostly negative” impact.

Most Democrats say the cuts to staff and spending will negatively impact health care for veterans (91%), food safety (91%), research to find cures and treatments for cancer and other diseases (90%), efforts to combat the spread of infectious diseases like measles and bird flu (88%), and racial disparities in health care (87%).

Republicans are more positive about how the cuts will impact the budget and waste in health care, with at least seven in ten saying the cuts will have a “mostly positive” impact on reducing the U.S. budget deficit (73%) and reducing fraud, waste, and abuse in health care (71%). Most Democrats say the cuts to staff and spending will have a “mostly negative” impact in these areas while independents are divided in how they think the cuts will impact fraud and waste as well as reducing the U.S. budget deficit.

Republicans are also more likely than both independents and Democrats to think that the cuts to staff and spending will not have any impact on the areas that affect public health, like racial disparities in health care (65%), food safety (57%), efforts to combat infectious disease (56%), and research to find cures for treatments for cancer and other diseases (52%). Majorities of independents and Democrats think the cuts will have “mostly negative” impacts in each of these areas.

Medicaid for children plays a vital role in covering kids in the United States. As of late 2024, more than 37 million children – almost half the nation’s children ^{– were enrolled in Medicaid or the Children’s Health Insurance Program (CHIP).}

But many families may not be aware of the state and federal guidelines that make their children eligible for coverage. Here are six facts about eligibility that might help if you need Medicaid for your children.

In nine states, there’s a “coverage gap” for some low-income adults who aren’t eligible for Medicaid and whose income is too low to be eligible for Marketplace subsidies. (Income generally must be at least 100% of the federal poverty level to qualify for Marketplace subsidies). ^{But there is no coverage gap for children, because Medicaid income limits for kids extend well above the federal poverty level in all states.}

Are my children eligible for Medicaid? You can use our federal poverty level calculator to get an idea of whether your kids might be eligible for Medicaid or CHIP.

Unlike private health insurance through the Marketplace, off-exchange from an insurer, or from an employer, there is no annual enrollment window for Medicaid. ^{An eligible person can enroll anytime. So if your kids are uninsured and you think they might be eligible for Medicaid or CHIP, you can apply for coverage on their behalf right away. You can} select your state on this page to see details about eligibility and the enrollment process.

And Medicaid can be retroactive by up to three months in most states, meaning that medical expenses your kids incurred recently might be covered after they enroll.

The specifics of these programs – including whether they’re voluntary or mandatory ^{– vary from one state to another, so you’ll need to} contact your state Medicaid office for details.

If your child has Medicaid in addition to other coverage, Medicaid is always the secondary payer. This means the other insurance will be primary, and Medicaid will only start to pay benefits after the claim has been processed by the primary insurance.

With limited exceptions, CHIP is not available to children who are eligible for coverage under a state health benefits plan. So if a parent works for the state and has access to family coverage under the state health benefits program, their children will generally not be eligible for CHIP.

And states can impose more restrictive limits on CHIP. For example, Utah does not allow a child to enroll in CHIP if the child could enroll in an employer-sponsored plan for less than 5% of the household’s income.

As is always the case with Medicaid and CHIP, the details vary by state. But if your child is disabled or has costly ongoing medical needs, you may find that they can qualify for Medicaid even if your household wouldn’t otherwise qualify based on income alone. You can reach out to the Medicaid office in your state to get more information.

There are several states with legislation pending in 2025 that would direct the state to seek federal approval for various terms of continuous Medicaid coverage for kids. They include Alaska, ^{Montana, Rhode Island, and Texas.}

Chronic, non-communicable diseases are the leading cause of death worldwide and make up 8 of the 10 top causes of death in the U.S. Across several chronic diseases, the U.S. has a higher burden of illness than peer nations. The reasons why are complex and include differences in how health care is managed, poverty, diet and exercise, and more.

This chart collection compares rates of chronic diseases such as obesity, diabetes, hypertension, chronic obstructive pulmonary disease (COPD), kidney disease, cancer, and depression in the U.S. to other countries of similar size and wealth, including Australia, Austria, Belgium, Canada, France, Germany, Japan, the Netherlands, Sweden, Switzerland, and the U.K.

The analysis is available through the Peterson-KFF Health System Tracker, an information hub dedicated to monitoring and assessing the performance of the U.S. health system.

President Trump has just signed an executive order outlining several proposals related to prescription drug prices, including efforts to “improve upon” the Inflation Reduction Act, a law signed by President Biden in 2022 with several provisions to lower prescription drug costs for people with Medicare and reduce drug spending by the federal government. In the new executive order, the Secretary of HHS is directed to work with Congress to implement a change in the Medicare Drug Price Negotiation Program to delay negotiation of so-called “small molecule” drugs beyond 7 years after FDA approval under current law. This change would mean that small molecule drugs would be on the market longer before they are eligible to be selected for Medicare drug price negotiation, which could lead to higher Medicare prescription drug spending, higher prices, and potentially higher Medicare Part D premiums.

Under current law, high-spending drugs can be selected for negotiation if they are brand-name drugs or biological products without generic or biosimilar equivalents, and at least 7 years (for small molecule drugs) or 11 years (for biologics) past their FDA approval or licensure date when the list of drugs selected for negotiation is published by the Centers for Medicare & Medicaid Services (CMS). This translates into 9 years for small molecule drugs or 13 years for biologics following FDA approval when Medicare’s negotiated prices take effect. Consistent with the new Trump administration executive order, some members of Congress have proposed legislation supported by the pharmaceutical industry to exempt small molecule drugs from selection for negotiation for an additional 4 years so that both types of drugs would be on the market for 11 years prior to being eligible for selection and for 13 years prior to Medicare’s negotiated prices taking effect.

Compared to biologics, small molecule drugs, which often take the form of pills or tablets, are typically cheaper and easier to manufacturer, easier for patients to take, and less expensive on average. Consequently, the shorter timeframe for selection of small molecule drugs has been characterized by its critics as a so-called “pill penalty,” with the pharmaceutical industry claiming that making small molecule drugs eligible for negotiation sooner than biologics will discourage investment in these drugs. However, changing the law to further delay the selection of small molecule drugs for Medicare price negotiation would come at a cost to Medicare and beneficiaries by giving drug companies 4 additional years of setting their own prices on these drugs prior to being eligible for negotiation by the federal government, unless combined with other changes to prevent higher spending.

If Medicare was not allowed to negotiate prices for small molecule drugs until 11 years after FDA approval, rather than 7 years, more than half of the Part D drugs that were selected for price negotiation in the first or second rounds – 13 out of 25 – would not have been eligible at the time drugs were selected. During the first round of negotiation (for negotiated prices taking effect in 2026), 5 of the 10 selected Part D drugs would not have been eligible for negotiations, based on the number of years since they were approved by the FDA. For the second round of negotiation (for negotiated prices taking effect in 2027), 8 of the 15 drugs would not have been selected (Figure 1, ‘Selected drugs’ tab and Table 1).

A 4-year delay in selecting small molecule drugs for price negotiation would have exempted several drugs with high total gross Medicare Part D spending in the first and second rounds of negotiation. For example, Eliquis and Jardiance, 2 of the top 3 drugs based on total gross Medicare Part D spending selected in the first round, would have been ineligible that year based on their FDA approval dates. Similarly, 2 of the top 3 drugs selected in the second round, Ozempic/Rybelsus/Wegovy (semaglutide) and Trelegy Ellipta, would have been ineligible for selection based on their approval dates. (Despite having an injectable form like many biologics, Ozempic has a molecular structure that enables it to be regulated and approved under the same pathway as small molecule drugs.)

To illustrate the implications of this potential change, under current law, small molecule drugs qualified for selection in round two of negotiation if they were approved by the FDA at least 7 years before the February 1, 2025 publication date of the list of selected drugs, or February 1, 2018, which translates to 9 years before the round two negotiated prices take effect in 2027. Ozempic was approved on December 15, 2017, which is more than 7 years before February 1, 2025, and was eligible for selection in round two under current law. However, if selection of small molecule drugs had been delayed an additional 4 years, as has been proposed, Ozempic would have been ineligible for selection. By extending the period from 7 years to 11 years after FDA approval before small molecule drugs can be selected for negotiation, Ozempic would not be eligible for negotiation until after December 5, 2028, and would have 13 years following FDA approval before Medicare’s negotiated price took effect.

The 13 drugs that would have been ineligible to be selected for negotiations during the first and second rounds under a 4-year delay for small molecule drugs accounted for two-thirds of total gross Medicare Part D spending on the 25 selected drugs, or $61 billion out of $91 billion. The 5 small molecule drugs that would have been ineligible for selection during the first round of negotiations account for $32.4 billion (64%) of the $50.5 billion total gross Part D spending on all 10 selected drugs. This is based on spending between June 2022 and May 2023, the period used to determine gross Part D spending to select drugs for the first round of price negotiation (Figure 1, ‘Spending’ tab).

The 8 drugs that would have been ineligible for selection in the second round account for $28.7 billion (71%) of the $40.7 billion in total gross Part D spending on all 15 selected drugs. This is based on spending between November 2023 and October 2024, the period used to determine gross Part D spending to select drugs for the second round of price negotiations.

If small molecule drugs had been subject to an additional 4-year delay from their FDA approval date prior to being eligible for selection in the first two rounds of Medicare drug price negotiation, Medicare would have had to select several other drugs with lower total gross Part D spending in order to round out the list of selected drugs in each year. This suggests that enacting this change in law could increase Medicare spending relative to current law due to lower savings associated with drug price negotiation, with potentially higher drug prices and premiums for Part D enrollees. While the Trump administration’s executive order suggests that other reforms could be implemented to prevent an increase in overall costs to Medicare and beneficiaries associated with this policy change, it did not specify the details of those changes.

The financial health of rural hospitals has been an ongoing concern for some policymakers. More recently, these concerns have been amplified in the context of the concurrent budget resolution that passed the House and Senate in April 2025, with instructions for the House to reduce federal Medicaid spending by up to $880 billion or more over the next decade. The financial challenges of rural and other financially vulnerable hospitals have also been raised in the context of proposals to achieve Medicare savings through site-neutral payment reforms, which would align Medicare payment rates for a given outpatient service across different sites of care. Strains on hospital finances could have implications for both access to care as well as local economies, including in rural areas. Hospitals are the sixth largest employer nationally when comparing industry subsectors. As policymakers consider reductions in Medicaid and Medicare spending, some are considering options to support rural and safety-net hospitals.

In light of these policy discussions, this brief presents ten things to know about rural hospitals, using data from Medicare cost reports, the American Hospital Association (AHA) Survey Database, and other sources (see Methods for more details). Rural hospitals are defined as those in nonmetropolitan areas (and urban hospitals as those in metropolitan areas), in line with a definition used by the Medicare Payment and Advisory Commission (MedPAC), though there are several ways of defining “rural” (see Methods). The federal government also includes nonmetropolitan in its definition of “rural” for certain Medicare rural payment designations. Rural areas are further broken out in this brief into those that are adjacent to metropolitan areas and those that are not. Rural counties that are not adjacent to metropolitan areas are referred to as the “most rural” areas. The analyses focus on community hospitals or non-federal general short-term hospitals that comprise the majority of all hospitals, unless stated otherwise. (See Methods for additional information about the definition of rural and the analytic sample.)

Although rural hospitals more frequently have negative operating margins than urban hospitals, more than half had positive operating margins in 2023 (the most recent year of data available), and nearly one fifth (19%) had margins of at least 10%. Rural hospitals in states that have not adopted the Affordable Care Act (ACA) Medicaid expansion were more likely to have negative margins than rural hospitals in expansion states. Among rural hospitals, negative margins were more common among those in the most rural areas, while positive margins were more common among those that had more beds, higher occupancy, were affiliated with a health system, and were not government-owned in 2023.

1. Rural hospitals account for about one third of all community hospitals nationwide and at least a third of all hospitals in most states

About one third (35%) of all community hospitals were in rural areas in 2023 (Figure 1), or 1,796 rural community hospitals. Rural hospitals accounted for only 8% of all discharges nationwide, in part because they tend to be smaller and serve less densely populated areas, contributing to lower volumes than urban hospitals. Forty-six million people lived in rural areas in 2023 as it is defined in this issue brief, most of whom (88%) resided in a county with a hospital.

Rural hospitals operate in nearly every state (48) and account for at least a third of hospitals in most (31) states. In 17 states, rural hospitals accounted for at least half of all hospitals, including states in the Northwest, South, Midwest, and West. Rural hospitals accounted for at least 70% of hospitals in seven states, five of which border each other in the Great Plains: Montana, Nebraska, South Dakota, North Dakota, and Wyoming.

Over two fifths (44%) of rural hospitals were in areas that are not adjacent to metropolitan areas. These hospitals represented 3% of all hospital discharges and operated in 43 states. Fifteen million people lived in rural areas not adjacent to a metro area in 2023 compared to 31 million in rural adjacent areas.

Rural hospitals provide varying types of inpatient and outpatient services. For example, about half of rural hospitals provide obstetrics care (53%), intensive medical and surgical care (50%), and care through a certified trauma center (52%). In 2023, Medicare began to offer a new rural emergency hospital (REH) designation, which provides support to hospitals that operate 24/7 emergency departments but do not provide inpatient care, recognizing that some regions cannot support a broader suite of services.

Rural hospitals tend to have fewer beds, are less likely to be part of a broader health system, are less likely to have for-profit ownership, and are more likely to be government-owned than urban hospitals according to prior KFF analysis, and they are also more likely to have low inpatient occupancy rates. For example, as might be expected, a larger share of rural hospitals (50%) than urban hospitals (14%) have 25 or fewer beds. One third of rural hospitals are owned by a state or local government versus 10% of urban hospitals. About half of all rural hospitals are part of a broader health system, as compared to more than three quarters of all urban hospitals (52% versus 78%). Consolidation may allow providers to operate more efficiently and help struggling providers keep their doors open in underserved areas, but it could also reduce competition—which may lead to higher prices and lower quality—and make hospitals less responsive to their local communities.

2. Medicare covered a larger share of hospital discharges in rural than urban areas in 2023, while private insurance covered a smaller share and Medicaid covered a similar share

Medicare covered a larger share of discharges in rural versus urban areas (53% versus 45%) while Medicaid covered a similar share (19% versus 21%) and private insurance (not including Medicare and Medicaid plans) covered a smaller share (19% versus 24%). Private insurers generally reimburse at higher rates than Medicare and Medicaid.

With Medicaid covering about one fifth of discharges in rural areas, any substantial reduction in Medicaid spending could have a large impact on rural hospital finances, particularly given the lower margins of rural hospitals. In addition to providing primary coverage for many patients, Medicaid also provides secondary coverage for many beneficiaries who are dually enrolled in Medicare.

3. Medicaid covered nearly half of all births in rural areas, the vast majority of which were in hospitals, in 2023

Medicaid covered 1.5 million births in 2023—representing 41% of all U.S. births—and financed nearly half (47%) of births in rural areas (Figure 3). Births are the most common reason for a hospital inpatient stay. The vast majority (96%) of births in rural areas occurred in a hospital in 2023 according to KFF analysis of CDC data.

Decreases in Medicaid spending could accelerate the closure of obstetrics service lines in rural hospitals, in addition to affecting the availability of services at rural hospitals more generally. From 2010 to 2022, 238 rural hospitals closed obstetrics units while only 26 hospitals opened new units. Low Medicaid reimbursement rates and difficulty recruiting and retaining providers were cited as the biggest challenges to providing obstetrics care in rural areas, according to the Government Accountability Office.

4. A larger share of rural than urban hospitals had negative margins in 2023, though more than half of all rural hospitals had positive margins

Despite the government support that most rural hospitals receive, a larger share of rural hospitals had negative operating margins than did urban hospitals in 2023 (44% versus 35%) (Figure 4). A larger share of rural hospitals in areas that were not adjacent to a metropolitan area (i.e., that were in the most rural areas) had negative margins than did rural hospitals in areas adjacent to a metropolitan area (49% versus 40%). Operating margins reflect profit margins earned on patient care and other operating activities, rather than profits earned on other sources, such as investments.

At the same time, more than half (56%) of all rural hospitals had positive operating margins. Further, while about one sixth (15%) of all rural hospitals had margins less than -10%, about one fifth (19%) had margins greater than 10% (data not shown). In other words, financial conditions as measured by operating margins varied substantially across rural hospitals.

Rural hospitals may face financial and operational challenges for a number of reasons. For example, rural hospitals tend to have low patient volumes, stemming from low and declining populations in rural areas and rural patients bypassing local hospitals for treatment at urban facilities. Low patient volumes may lead to higher costs on average—e.g., to the extent that the fixed costs of operating a hospital, such as building upkeep and maintaining a minimum number of administrative and clinical staff, are spread across fewer patients—and limit the ability of rural hospitals to offer specialized services. Many rural areas also have a particularly hard time attracting and retaining health care workers.  Both urban and rural hospitals have encountered financial challenges since the start of the COVID-19 pandemic, including rising labor and supply costs, although there are signs that hospital finances have been recovering.

5. Among rural hospitals, positive margins were more common among those that had more beds, higher occupancy, were affiliated with a health system, and were not government-owned in 2023.

Large, high occupancy, system-affiliated, and non-government rural hospitals were more likely than other rural hospitals to have positive margins. While 56% of rural hospitals overall had positive margins, the share was larger among hospitals with at least 200 beds (73%), with occupancy rates of at least 75% (70%), and that were affiliated with a broader system (63%). For-profit and nonprofit rural hospitals also more frequently had positive margins (62% and 61% respectively) than rural hospitals overall.

While 44% of rural hospitals overall had negative margins, about half of rural hospitals that had 26-99 beds (52%) and were not affiliated with a broader health system (51%) had negative margins. The likelihood of having negative margins tended to decrease with lower occupancy rates and fewer beds, except that hospitals with 25 or fewer beds were less likely to have negative margins than average. That may reflect the fact that this group mostly includes critical access hospitals, which receive additional government support.

More than half of non-federal, government-owned hospitals (54%)—which make up a third of rural community hospitals—had negative margins. Most government-owned hospitals in rural areas included in this analysis are operated by a county or hospital district.

6. The ACA Medicaid expansion has helped improve hospital finances, and may especially benefit rural hospitals

State Medicaid expansion under the Affordable Care Act has had financial benefits for hospitals according to several studies. The financial impact of Medicaid expansion for at least certain measures may be most evident among rural hospitals, small hospitals, and hospitals that see a higher proportion of low-income patients, based on some of this research.

Half (50%) of rural hospitals in states that had not adopted the ACA Medicaid expansion as of the beginning of 2023 had negative margins in that year, compared to four tenths (41%) of rural hospitals in expansion states. Differences were larger among hospitals in the most rural areas (i.e. in rural areas not adjacent to metropolitan areas). In those regions, about six tenths (59%) of hospitals in non-expansion states had negative margins compared to less than half (45%) of rural hospitals in expansion states. Differences between expansion and non-expansion states could reflect the effects of expansion on hospital finances but could also reflect a variety of unique state circumstances, such as demographics, hospital ownership and cost structure, commercial reimbursement rates, and state and local health and tax policy.

About two thirds (69%) of the rural hospital closures from 2014 to 2024 occurred in states that had not expanded Medicaid at the time according to KFF analysis of data from the UNC Sheps Center. (The Sheps Center has a broader definition of “rural” than used in this brief, such as by including critical access hospitals in metropolitan areas).

7. Hospital closures outpaced openings in rural areas from 2017 to 2024, and many rural hospitals have dropped specific service lines over time.

From 2017 to 2024, 62 rural hospitals closed compared to 10 that opened, a net reduction of 52 hospitals. (Closures refer to hospitals that eliminate inpatient services—aside from those that convert to rural emergency hospitals—or cease operations altogether). Over the longer twenty-year period from 2005 to 2024, 193 rural hospitals closed according to the UNC Sheps Center (which uses a broader definition of “rural” than this brief). The small number of studies that have evaluated the association between consolidation with rural hospital closures and service eliminations have had mixed results.

Aside from closing altogether, rural hospitals have also dropped certain service lines over time. For instance, according to one analysis, the share of rural hospitals offering obstetrics care dropped from 57% in 2010 to 48% in 2022. The share among urban hospitals also dropped over that period (from 70% to 64%) but remained higher than in rural areas in 2022 (64% versus 48%). Government relief funds may have helped some rural hospitals stay open and maintain certain service lines during the COVID-19 pandemic. The new REH hospital designation in 2023 may have helped prevent some rural hospitals from closing according to MedPAC.

Rural hospital closures often raise concerns about access to care and the local economy. When a rural hospital closes, patients may have to travel further to obtain services, which could lead some to forgo care altogether. Closures may be especially problematic for people who have difficulty traveling long distances and for people with time-sensitive conditions, such as heart attacks and childbirth. Research suggests that rural hospital closures lead to increased unemployment (including among non-healthcare industries), lower income levels, and slower economic growth.

While there has been interest among some policymakers in sustaining rural hospitals, doing so may be difficult in certain scenarios—such as in areas with shrinking populations—and could involve tradeoffs. For instance, although rural hospitals can help the local population access care, it is also possible that some of the services they offer can be provided at a lower cost through telehealth or freestanding rural outpatient clinics. Further, while traveling to large regional hospitals may be burdensome for patients in some cases, it is also possible that these hospitals may offer higher quality of care in certain scenarios.

8. Medicare provides additional funding for the large majority (96%) of rural hospitals through special payment designations

Traditional Medicare includes special payment designations targeted towards rural hospitals that can increase payments through the inpatient and outpatient prospective payment systems (IPPS), by reimbursing hospitals based on their costs, or by providing monthly facility payments. The Medicare-dependent designation and an expansion of low-volume hospital adjustments are not permanent but have been renewed over time. Congress passed a continuing resolution in March 2025 that extends these policies through September 30, 2025, and proposed legislation in the Senate would make them permanent.

A hospital may only be designated as one of the following:

• Critical access hospitals (CAHs) are rural hospitals with at most 25 beds that are a minimum distance from other facilities (with some exceptions) and meet other requirements. Medicare pays CAHs 101% of inpatient and outpatient costs (although with sequestration, it reimburses below cost). CAHs receive an estimated $3 to $4 billion in higher payments annually according to a 2022 MedPAC report. CAH is the most common designation, accounting for more than half (59%) of rural hospitals in 2023 (Figure 7).
• Sole community hospitals (SCHs) are hospitals that are the only source of short-term, acute inpatient care in a region. Medicare reimburses some SCHs at higher rates than they would have received under IPPS, including based on historical costs. Since 2006, CMS has also increased OPPS rates for rural SCHs. SCHs receive $0.8 billion in higher payments annually (including low-volume adjustments to SCHs) according to a 2022 MedPAC report.
• Medicare-dependent hospitals (MDHs) are small rural hospitals with high Medicare inpatient shares. Medicare pays MDHs higher rates based on historical costs if greater than IPPS rates. MDHs receive $0.1 billion in higher payments annually according to a 2022 MedPAC report.
• Rural emergency hospitals (REHs) are rural hospitals that operate 24/7 emergency departments but do not provide inpatient care. REHs are reimbursed at 105% of standard OPPS rates and receive monthly facility payments. This designation became available in 2023, recognizing that some areas cannot support a broader suite of services. MedPAC has estimated that REHs cost an additional $30 million in 2023, much lower than original CMS projections for 2023 ($408 million), possibly because fewer hospitals converted to REHs in 2023 than originally anticipated. Nineteen hospitals converted in 2023 (most of which did so in the second half of the year) and an additional 18 converted in 2024 according to the UNC Sheps Center.

There are two additional rural designations that can be applied to a hospital, with additional benefits:

• Low-volume hospitals (LVHs) are hospitals with few discharges that are a minimum distance from other facilities. They receive up to 25% higher payments through the IPPS. LVHs receive $0.4 billion in higher payments annually according to a 2022 MedPAC report.
• Rural referral centers (RRCs) are hospitals that generally either treat patients from across a large region or treat complex cases. Some RRCs are eligible for higher IPPS base payments, among other benefits. Although RRCs are sometimes referred to as a rural payment designation, most (73%) are not in rural areas based on KFF analysis of cost report data. There is no recent estimate for the value of this designation.

While these special payment designations are available for hospitals discharges covered by traditional Medicare, Medicare Advantage accounts for a rising share of discharges across the nation, and is growing more rapidly in nonmetropolitan areas, which may pose additional challenges for rural hospitals. Hospitals in rural areas and elsewhere have raised concerns about the growth of Medicare Advantage, pointing to payment delays and denials and lower reimbursement than traditional Medicare. According to the American Hospital Association, Medicare Advantage reimburses rural hospitals at lower rates than traditional Medicare on average. MedPAC has noted that Medicare Advantage plans do not pay REHs monthly facilities payments (in contrast to traditional Medicare), and at least some providers have said they do not receive increased Medicare Advantage payments equivalent to the payment bumps under traditional Medicare rural payment designations. Whether or to what extent rural hospitals experience revenue declines as Medicare Advantage covers a larger share of Medicare patients is unclear.

Other federal programs or policies also provide additional support for rural hospitals. For instance, Medicare adjusts IPPS and OPPS reimbursements based on the wages hospitals pay in a given area (known as the Wage Index), which generally results in lower reimbursement for rural hospitals. However, sole community hospitals and rural referral centers can be more easily reclassified to areas that receive higher reimbursements through the Wage Index. Many state Medicaid programs also have special payment rules for hospitals in rural areas, such as by paying higher rates or based on costs or through supplemental payments. HRSA also administers several programs providing grants, technical support, workforce development, and other assistance to rural hospitals and rural providers more generally. As another example, the Center for Medicare & Medicaid Innovation (CMMI) recently concluded its test of the Pennsylvania Rural Health Model, which provided rural hospitals with an all-payer global budget and was intended to reduce costs, increase quality, and improve the sustainability of rural hospital finances.

Rural hospitals can also benefit from other programs or payment policies that are available to certain hospitals across the country. This includes higher Medicare reimbursement for Disproportionate Share Hospitals, tax-exempt status for nonprofit hospitals, and participation in the 340B Drug Pricing Program, which requires manufacturers participating in Medicaid to sell outpatient drugs to eligible nonprofit and government providers at a substantial discount, with the intent of supporting entities caring for low-income and other underserved populations. In 2023, critical access and sole community hospitals alone purchased $1.5 billion in 340B drugs.

9. Even with additional funds, about half of sole community, Medicare-dependent, and low-volume hospitals had negative margins in 2023.

About half of sole community hospitals (49%), Medicare-dependent hospitals (52%), and low-volume hospitals (52%) had negative margins in 2023. As discussed below, there have been proposals to increase Medicare reimbursement for these facilities. A smaller share of critical access hospitals (40%) and rural referral centers (37%) reported negative margins in 2023 than hospitals in other designated categories, such as sole community hospitals.

10. Significant reductions in federal spending on health care under consideration would have direct or indirect implications for rural hospitals

The House and Senate passed a concurrent budget resolution in April 2025 with instructions for the House Energy & Commerce Committee to reduce the federal deficit by at least $880 billion over ten years, which the Congressional Budget Office and other analysts have confirmed would require significant cuts to Medicaid. Large reductions in Medicaid would likely have significant implications for hospitals, given that hospital care accounted for about one third of Medicaid spending in 2023. Options under consideration for reducing Medicaid spending include targeting state directed payments to hospitals or restricting states’ ability to fund Medicaid through provider taxes. Because provider taxes disproportionately fund supplemental payments to hospitals, restricting them as a revenue source is likely to result in lower funding for hospitals broadly, including for rural hospitals. Also being considered among other options is reducing the federal share of funding for Medicaid expansion, which has helped improve hospital finances. The hospital industry has been lobbying Congress against proposed cuts, arguing that reductions in Medicaid spending would threaten access to care at hospitals.

Also being discussed are site-neutral payment reforms that would achieve Medicare savings by aligning Medicare payment rates for a given outpatient service across different sites of care. These reforms would reduce payments to hospitals, with the impact varying based on the extent to which a given hospital relies on Medicare outpatient revenues and other factors. MedPAC estimated that one approach applying to on- and off-campus hospital outpatient departments (HOPDs) would lead to relatively large decreases in Medicare revenues for smaller and rural hospitals. Other research has found that off-campus HOPDs—the focus of some reforms—account for a smaller share of outpatient revenues in rural versus urban areas.

Some Members of Congress have expressed concern about the impact of site-neutral payment reforms on rural hospitals, though these reforms would likely not apply to many rural hospitals. Site-neutral payment reforms would likely only apply to OPPS reimbursement and would therefore not affect critical access hospitals, which are reimbursed based on costs and account for most rural hospitals (59%; see Figure 7). CMS has excluded sole community hospitals (20% of rural hospitals) from an existing regulation that extends site-neutral payments to clinic visits at off-campus HOPDs, and it is possible that future policies may do the same. Senators Cassidy and Hassan released a framework for site-neutral reforms in November 2024 that would reinvest some of the savings by increasing reimbursement for sole community, Medicare-dependent, and low-volume hospitals, as well as for urban and suburban safety-net hospitals and certain essential services.

Members of Congress have proposed various policies to prop up rural hospitals that could also be used to soften the impact of cuts to federal spending. For example, bills introduced during the last Congress would expand support for rural emergency hospitals, allow for increased reimbursement for Medicare-dependent and sole community hospitals, and eliminate Medicare sequestration for rural hospitals. More recently, Republicans released a menu of options for reducing federal spending in February 2025, which included an offsetting measure that would expand the rural emergency hospital program. Notably, the list of options did not include new sources of funding for urban safety-net hospitals, even though some of the major options for cutting spending would likely have a disproportionate impact on these facilities, including large cuts in Medicaid spending and reductions in Medicare uncompensated care and bad debt payments.

Methods

There are many different ways of defining rural areas, each of which would capture a different number of hospitals with different characteristics. The Appendix below includes examples of different definitions created by various federal agencies. This analysis defines rural as nonmetropolitan, in line with a definition used by MedPAC, and given the policy relevance of nonmetropolitan areas. The federal government defines “rural” areas as including nonmetro areas and other regions in some instances, such as when administering additional support through Medicare for critical access hospitals, Medicare-dependent hospitals, sole community hospitals, and rural emergency hospitals. Nonetheless, the definition of rural in this brief includes some areas that others would consider to be urban and excludes some areas that others would consider to be rural. For example, the Federal Office of Rural Health Policy (FORHP), which is part of HRSA, uses a broader definition of rural, noting that some large unpopulated regions, such as the Grand Canyon, are in metropolitan counties.

Data for this analysis came from the following sources:

• American Hospital Association (AHA) Annual Survey. Data from an annual survey of all hospitals in the United States and its associated areas. Used for analyses of rural hospital prevalence, hospital discharges, hospital services, payer mix, and system membership.
• RAND Hospital Data. A cleaned and processed version of annual cost reports that Medicare-certified hospitals are required to submit to the federal government. Used for analyses of hospital margins and special Medicare payment designations.
• UNC Sheps Center lists of rural hospital closures and rural emergency hospitals. The former tracks closures among short-term, general acute care, non-federal hospitals in nonmetropolitan and certain other areas and among critical access and rural emergency hospitals. Closure data was was matched to KFF data on Medicaid expansion status and date of expansion to determine the expansion status of a given state when a given rural hospital closure occurred. The latter was used to identify rural emergency hospitals.
• Census Bureau population estimates. This analysis relied on annual population estimates from July 1, 2023 (excluding U.S. territories) from the Census Bureau’s Population Estimates Program.
• MedPAC publications. MedPAC’s March 2025 Report and July 2022 Data Book were used to identify rural hospital openings and closures over time,

This analysis categorized counties and county equivalents as urban (metropolitan) or rural (nonmetropolitan) areas and divided rural areas into those that are or are not adjacent to metropolitan areas based on 2024 Urban Influence Codes from the USDA, as follows:

• Urban
  • 1: Large metro (in a metro area with at least 1 million residents)
  • 4: Small metro (in a metro area with fewer than 1 million residents)
• Rural, adjacent to a metro area
  • 2: Micropolitan, adjacent to a large metro area
  • 3: Noncore, adjacent to a large metro area
  • 5: Micropolitan, adjacent to a small metro area
  • 6: Noncore, adjacent to a small metro area
• Rural, not adjacent to a metro area (“most rural”)
  • 7: Micropolitan, not adjacent to a metro area
  • 8: Noncore, not adjacent to a metro area and contains a town of at least 5,000 residents
  • 9: Noncore, not adjacent to a metro area and does not contain a town of at least 5,000 residents

This analysis uses different groups of hospitals depending on the analysis, as described in the figure notes. Analyses primarily using AHA data focused on community hospitals—which are short-term, non-federal, general and specialty hospitals that are open to the general public—and exclude hospitals in U.S. territories. There were 1,796 community hospitals in rural areas in 2023, representing 92% of all hospitals in rural areas.

Analyses of hospital margins relied primarily on RAND Hospital Data and focused on non-federal general short-term hospitals, excluding those in U.S territories. Those analyses also included other sample restrictions, such as ignoring certain outlier values. Operating margins were approximated as (revenues minus expenses) divided by revenues after removing reported investment income and charitable contributions from revenues. The Methods section of a prior KFF analysis of operating margins includes additional details, such as the limitations of available financial data. Our analyses of margins included 1,690 hospitals in rural areas in 2023. Data for certain characteristics were missing for 1% or less of the sample with margins data.

The analysis of the share of rural hospitals with special payment designations focused on non-federal general short-term and rural emergency hospitals (excluding those in U.S territories), which included 1,787 hospitals in 2023.

Relative to the size of its economy, the U.S. spends a greater amount on health care than other high-income nations. And while the U.S. has long had higher than average health spending, recent years have seen higher spending growth in peer nations. This chart collection compares health care spending in the U.S. and other OECD countries that are similarly large and wealthy, using data from the OECD Health Statistics database.

The slideshow is available through the Peterson-KFF Health System Tracker, an online information hub dedicated to monitoring and assessing the performance of the U.S. health system.