The One Big Beautiful Healthcare Crisis

Trump’s Medicaid cuts will widen healthcare deserts and benefit Big Medicine.

By Emma Freer, Sr. Policy Analyst for Healthcare

Earlier this month, Community Hospital in McCook, Nebraska, announced it will close a rural clinic in nearby Curtis, home to about 900 people. The reason? The One Big Beautiful Bill’s cuts to Medicaid.

Community Hospital and other independent safety-net providers – including rural hospitals and clinics, community health centers, and nursing homes – are already in a battle for survival. These cuts will make their situation worse, while also making it easier for Big Medicine to capitalize on their distress by acquiring them. As a result, vulnerable patients will suffer, finding themselves stranded in either a care desert or at a corporate-owned entity that charges more for worse-quality care.

In exchange for further destabilizing the U.S. healthcare system, President Donald Trump and congressional Republicans got $4.5 trillion in tax breaks for the richest Americans. Even Sen. Josh Hawley (R-MO), who ultimately voted along party lines in support of the bill, described this deal as “morally wrong and politically suicidal.”

Lawmakers from both parties who want to resuscitate safety-net providers – and perhaps their own political futures – must not only restore Medicaid funding but also rebuild our healthcare system to prioritize patients and practitioners over corporate interests.

The largest Medicaid cut in U.S. history

The new law results in the largest cut in Medicaid’s 60-year history, slashing spending by nearly $1 trillion. It accomplishes that in part by curtailing states’ ability to fund Medicaid, which they finance alongside the federal government. More specifically, the law restricts states’ ability to tax hospitals, nursing homes, and other healthcare providers. Every state except Alaska has used these provider taxes for decades to generate their share of Medicaid funding, as well as to increase the federal matching dollars they receive, which are based on state contributions. Providers support these taxes because they ensure the financial stability of their state’s Medicaid program, without which they would face higher uncompensated care costs and lower reimbursement rates.

The law also imposes new Medicaid work and reporting requirements. Research shows that such requirements don’t promote increased employment – most non-disabled recipients under the age of 65 are already employed. Instead, unable to keep up with the bureaucracy that work requirements impose, they are unjustly cut from the rolls, which is why the Congressional Budget Office estimates nearly 12 million people will lose Medicaid coverage as a result.

When combined with cuts to Medicare and premium subsidies for Affordable Care Act (ACA) plans, these policy changes threaten to eliminate safety-net providers’ profit margins, which are already thin due to increasingly high rates of un- and undercompensated care. This will devastate both low-income patients and safety-net providers that disproportionately rely on Medicaid to pay for care. The Groundwork Collaborative estimates 338 rural hospitals and 579 nursing homes could close as a result of the law’s passage. Even Big Medicine insurers – which administer private Medicaid, Medicare, and ACA plans – will see their profits pinched.

A big win for Big Medicine

Safety-net providers that don’t close will still be extremely at risk and thus easy targets for Big Medicine insurance conglomerates and private-equity firms, whose ongoing acquisition sprees and, in some cases, predatory lending practices, have intensified healthcare consolidation and its attendant harms.

For instance, UnitedHealth Group has a long track record of buying distressed medical assets. During the COVID-19 pandemic, which devastated physician practices, United’s publicly reported acquisitions included several large practices in Massachusetts, New York, Oregon, and Texas. In fact, by 2023, United was the largest physician employer in the country, with 10% of the workforce – roughly 90,000 doctors – under its control.

More recently, after a February 2024 cyberattack on its subsidiary claims processor Change Healthcare forced practices into a months-long cash-flow crisis, United bought at least one of them, Oregon’s Corvallis Clinic, prompting an exodus of physicians and steep price hikes for patients. United also extended emergency loans to more than 10,000 providers impacted by the attack – and is now demanding immediate repayment, threatening to withhold future reimbursements via its insurance arm. As a result, loan recipients are facing yet another United-generated cash-flow crisis that could force them to close their doors – or sell them in a fire sale.

Private-equity firms also pose a threat to patients, especially in rural areas, where they have acquired at least 130 hospitals seeking quick infusions of capital, according to the Private Equity Stakeholder Project. The acquiring firms, in turn, seek a quick profit by hiking prices and cutting costs, often through chronic understaffing, critical service closures, and looting. Although these transactions may keep rural hospitals open in the short term, investors’ business model “gambles with the lives of patients and the livelihoods of practitioners,” according to a May 2025 article published in the AMA Journal of Ethics. To make matters worse, many hospitals ultimately close once their private-equity investors cash out.

Investing in “small” medicine

Trump’s law is only the latest federal policy to favor Big Medicine at the expense of patients, providers, taxpayers, and health plan sponsors like employers and unions. Correcting this embedded imbalance will require more than just patching the fiscal holes created by the One Big Beautiful Bill.

Policymakers must rebuild the U.S. healthcare system to be friendlier to practitioners of independent, or “small,” medicine, like safety-net providers, rural hospitals, private physician practices, and independent pharmacies. One important step: Congress should standardize prices in both federal healthcare programs and the commercial market. Doing so would level the playing field, ensuring that independent providers are paid fairly for their services and eliminating Big Medicine’s unfair advantage in reimbursement negotiations.

We also need a bigger structural action. We must take steps to Break Up Big Medicine conglomerates by enacting legislation that structurally separates their business lines, which would eliminate inherent conflicts of interest that drive costs up and quality down.

There’s precedent for this, both in other industries and in health care. During the New Deal era, Congress passed the Glass-Steagall Act, which structurally separated commercial and investment banks given the systemic risks inherent to their common ownership. Much more recently, in April 2025, Arkansas passed a first-in-the-nation law that prohibits pharmacy benefit managers from owning pharmacies, paving the way for a similar ban on the national level – and a broader Glass-Steagall for health care that would prohibit any kind of payer from owning any kind of provider. The next month, Oregon also passed landmark legislation that aggressively limits private-equity ownership of physician practices.

Neither of these solutions would prevent future Medicaid cuts. But they would ensure safety-net providers – and their vulnerable patients – have a chance at surviving the injury.