President Trump signed the Big, Beautiful Bill into law on July 4, and the liberal outrage machine still hasn’t quieted down. Democrats and their allies in the media hurled just about every accusation imaginable at the legislation—including the claim that the bill would bankrupt hospitals in rural America. But our research should debunk this claim once and for all.
Just last week, the Bloomberg Editorial Board continued banging the liberal drum, making a slew of false accusations about the bill’s effect on hospitals. The Maine Morning Star—funded by the notoriously left-wing States Newsroom—then parroted a “report” issued by a left-wing lobbying group as a matter of fact. Even with the bill signed into law, the accusations keep coming. The Left is attempting to blame hospitals’ decades-long financial woes on a bill that has only begun to take effect: Get ready for the ads in battleground states next year.
Yet some hospitals that just months ago claimed the sky was falling have even been forced to backtrack on their claims after these comments triggered a panic among their patients—or among their bondholders.
Here are the facts. Yes, some of America’s hospitals are in bad financial shape, but not because of the president’s new law. In fact, the president’s new law will throw them a much-needed lifeline. The real problem facing America’s hospitals is their addiction to a fundamentally and irreparably flawed Medicaid program.
As the Left has repeated endlessly over the past few months, America’s hospitals are dependent on Medicaid, a program that pays hospitals notably less than private insurance and less even than ObamaCare exchange plans. Hospitals in most states run a net deficit on their Medicaid patients.
If any recent law is to blame for hospital closures, it is ObamaCare, which bribed states to expand eligibility for Medicaid to able-bodied adults. This has been a big problem for Medicaid recipients, since it has created a competition for resources between individuals with low income and individuals with disabilities, with a massive new population of able-bodied adults. In 2000, fewer than seven million able-bodied adults were on Medicaid— today, it’s 34 million. Federal taxpayers now spend more Medicaid dollars on able-bodied adults than we do on individuals with disabilities, the elderly, or kids—the most vulnerable among us, and the people Medicaid was created to serve.
ObamaCare was not just a disaster for patients, but for hospitals. States that took the ObamaCare Medicaid bribe soon found that their hospitals were about twice as dependent on Medicaid as those in states that didn’t expand eligibility. The result was that hospitals in expansion states were often running much higher deficits.
Hospitals in non-expansion states are financially healthier than those in states that took the ObamaCare bribe. Four out of five of the states with the most vulnerable rural hospitals right now are expansion states. The promise that expansion would save hospitals continues to come up empty.
All of this happened before anybody had ever heard of the Big, Beautiful Bill.
Fortunately, President Trump’s new law does two things that could ultimately improve hospital finances. The new law requires able-bodied adults on Medicaid who don’t have young kids to work, learn, or volunteer at least part-time. Despite the wild accusations and noise from the Left, this will not mean a vast increase in the uninsured population. As even left-leaning analysts have found, millions of Americans coming off of Medicaid under the president’s law will either transition to employer coverage or the ObamaCare exchanges. The rest are largely illegal aliens who were never eligible in the first place. This will kill three birds with one stone: it will improve Medicaid's finances, preserve more resources for the truly needy, and improve hospital finances as patients move from low-reimbursing Medicaid to high-reimbursing private coverage.
To strengthen rural hospitals, the Big, Beautiful Bill also establishes a $50 billion Rural Health Transformation Program, giving states broad flexibility to partner with providers and decide how best to use the funds. More needs to be done to fix America’s health care system. But President Trump’s new law is a historic effort to resuscitate America’s hospitals. That is a big deal—and a beautiful new law.
Hayden Dublois is data and analytics director at the Foundation for Government Accountability. Paige Terryberry also contributed to this column, and is a senior research fellow at the Foundation for Government Accountability.
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