News Summary

Recent assessments indicate that three rural hospitals in Michigan are at a high risk of closing due to federal funding cuts stemming from the ‘One Big Beautiful Bill Act.’ McLaren Central Michigan, the University of Michigan Health-Sparrow Carson City Hospital, and Ascension Borgess-Lee Hospital are particularly vulnerable due to their reliance on Medicaid funding. This situation highlights the challenges rural healthcare systems face as nearly 14 million Americans could lose their health insurance under the new legislation, which mandates work requirements for Medicaid recipients starting in 2027.

Mount Pleasant, Michigan – Three rural hospitals in Michigan have been identified as being at a significant risk of closure due to the recent implementation of the “One Big Beautiful Bill Act.” The hospitals facing this alarming situation are McLaren Central Michigan in Mount Pleasant, the University of Michigan Health-Sparrow Carson City Hospital, and Ascension Borgess-Lee Hospital in Dowagiac. Researchers at the University of North Carolina at Chapel Hill (UNC) conducted the assessment, which highlighted that these facilities are especially vulnerable due to their high reliance on Medicaid funding.

A fourth facility, Aspirus Ontonagon, has already transitioned to outpatient-only services after closing in April 2024, demonstrating the tangible fallout from healthcare funding changes. The researchers evaluated hospitals based on specific criteria, including negative total margins over three consecutive years and being among the top 10% of hospitals nationwide in terms of Medicaid payer mix.

Mark Holmes, director of UNC’s Cecil G. Sheps Center for Health Services Research, noted that hospitals largely reliant on Medicaid are more financially fragile, setting the stage for potential closures if funding cuts continue. McLaren Central Michigan and Carson City hospitals reported negative financial margins for the last three years, while Ascension Borgess-Lee Hospital was flagged primarily due to its high Medicaid patient demographic.

The University of Michigan Health system has stated there are currently no plans to close the Carson City hospital, yet they expressed concern about the impact of impending federal cuts on rural healthcare systems broadly. Similarly, McLaren Health Care anticipates that cuts to federal spending could have a “devastating and disproportionate impact” on access to medical care.

Medicaid serves as a vital government-funded health insurance program for low-income individuals, people with disabilities, and children, with about 2.6 million Michiganders, equating to 25% of the state population, enrolled in the program. In 2023, Michigan’s Medicaid program received significant federal funding of nearly $17.5 billion.

The “One Big Beautiful Bill Act,” signed into law by President Trump, enacts approximately $1.2 trillion in cutbacks across Medicaid and the Supplemental Nutrition Assistance Program (SNAP), introducing new work requirements primarily targeting able-bodied Medicaid recipients. This mandate will require individuals to prove they are working at least 80 hours per month beginning in 2027, although there are exceptions for specific groups.

Despite the White House’s assertion that Medicaid will not face cuts and that the bill aims to eliminate waste and fraud—including benefits for undocumented individuals—Democratic lawmakers have sounded alarm bells over potential health insurance losses. They warn the bill could result in nearly 14 million Americans losing their health insurance and shift billions of dollars in healthcare costs onto state budgets. The Congressional Budget Office projects that the legislation may lead to a loss of Medicaid coverage for approximately 11.8 million people.

Brian Peters, the CEO of the Michigan Health & Hospital Association, estimated that Michigan hospitals could face a funding downturn exceeding $6 billion over the next decade due to these forthcoming changes. This financial strain raises critical concerns about access to healthcare services, particularly in rural communities where hospitals rely heavily on federal reimbursement programs to remain operational.

Healthcare leaders have cautioned that without sustained federal support, the repercussions on service availability may be severe, with a heightened risk of job losses and further hospital closures. As the situation continues to evolve, affected communities and healthcare providers are left grappling with the uncertain future of rural healthcare access.