U.S. Senate Proposal Jeopardizes Distressed Hospitals

June 18, 2025

The U.S. Senate Finance Committee’s proposed changes to federal budget reconciliation legislation would slash funding to stabilize Pennsylvania’s struggling rural hospitals, undermining recent initiatives by state leaders to protect health care access in rural communities.

Additional Medicaid cuts that the Senate committee is proposing through changes to the House-passed legislation would accelerate hospital and service line closures, decimate access to care, and increase the economic fallout and job losses in Pennsylvania communities.

While all communities throughout the commonwealth would be affected, the cuts would effectively undo state budget investments that provide rural hospitals a necessary lifeline to continue to serve their communities. HAP’s analysis of the Senate committee’s proposal found it would wipe out nearly $1.7 billion in critical funding to the commonwealth’s rural hospitals over the next decade.

Here are five things to know.

• Background:  Supporting rural hospitals has been a bipartisan priority in Harrisburg. The 2024–2025 state budget includes targeted supports for rural and critical access hospitals.
• Funding at risk:  The U.S. Senate committee’s proposed cuts would affect federal matching dollars that bolster the state investments in rural hospitals, putting $1.7 billion in rural hospital funding at risk over 10 years.
• Not just rural:  While the federal cuts would undermine the commonwealth’s initiatives to support rural communities, patients throughout the commonwealth would be affected. Over 10 years, the Senate’s changes would slash more than $7.1 billion in funding that stabilizes hospitals statewide.
• Care in jeopardy:  More than half the commonwealth’s acute care hospitals are already operating at a loss and cannot absorb a cut of this scale. Communities would see decreased access to care as services and, in the worst cases, hospitals close.
• Economic deserts:  Health care deserts turn into economic deserts. If the Senate’s proposed changes are enacted Pennsylvania would lose about 562,100 jobs, $75.8 billion in economic impact, and $2.6 billion in lost federal state and local tax revenue over the next decade.

Learn more online about the vital importance of Medicaid and hospitals to the health and vitality of Pennsylvania communities.