Federal lawmakers have released findings from University of North Carolina researchers indicating that President Donald Trump’s “Big Beautiful Bill” could place over 300 rural hospitals across the U.S., including three in Michigan, at risk of closure and service reductions.
The three Michigan hospitals are McLaren Central Michigan in Mount Pleasant, University of Michigan Health-Sparrow Carson City Hospital, and Ascension Borgess-Lee Hospital in Dowagiac.
UM Health said it has no plans to close its Carson City hospital. "We continue to analyze the impact of the budget reconciliation bill, but do not have current plans to close UM Health-Sparrow Carson hospital. However, we remain very concerned about the implications of the federal changes on rural hospitals like Carson, as well as our entire health care system," a spokesperson said.
McLaren Health Care issued a similar statement, saying it doesn't plan to close its Central Michigan hospital, but "McLaren Health Care shares the concerns expressed by the broader provider community in that significant cuts to federal health care spending could have a devastating and disproportionate impact on people’s ability to efficiently access the necessary care they require.”
“In order to maintain a level of operation, providers would be forced into making difficult decisions, potentially eliminating meaningful services or, in severe circumstances, leading to the closure of facilities entirely,” the McLaren statement continued.
Ascension Borgess-Lee Hospital did not respond to requests for comment.
Rural hospitals in particular are vulnerable to the effects of the bill because of their heavy reliance on federal reimbursement programs, including Medicaid. According to the Michigan Department of Health and Human Services, Michigan hospitals receive nearly $7 billion in Medicaid funding annually, and 40% of small town and rural Michiganders rely on Medicaid.
Medicaid is a government-funded health insurance program for low-income and disabled individuals and families, as well as children.
The Trump administration has said there are not direct cuts to Medicaid for qualifying people, and the budget legislation will preserve Medicaid coverage for those who are eligible.
Democrats and advocacy groups have said the bill will place onerous requirements on people to prove their eligibility, resulting in many losing their health care — including hundreds of thousands in Michigan.
Laura Appel, the executive vice president of government relations and public policy at the Michigan Health and Hospital Association, said the legislation will also reduce funding to Michigan hospitals by billions of dollars over the next decade.
That's where the risk to the three hospitals named in the UNC report comes from, she said: Rural hospitals will bear the brunt of the cuts because Medicaid reimbursements are a higher proportion of their revenue.
Hospitals have the same fixed costs regardless of location, Appel said. But at rural hospitals, supplies, employees, and operating practice costs are spread over a smaller population, which means that the reimbursement does not cover the cost of patient care and other operations.
