KY hospital leaders worry about ‘Big, Beautiful Bill’ effects. ‘Everyone’s concerned’
Kentucky stands to lose more in benefits, Medicaid coverage and rural health care access than nearly any other state, should a GOP-backed bill that passed Tuesday in the U.S. Senate get final passage from the House, according to hospital administration, rural health care advocates and non-partisan research institutions.
The “massive budget and tax bill that will strip health care and food assistance from millions of Americans and hundreds of thousands of Kentuckians, while ensuring the wealthiest households benefit from a benefit from a bounty of new tax cuts,” Kentucky Center for Economic Policy Executive Director Jason Bailey said Tuesday.
Beyond the immediate impact on individuals, should either the House or Senate’s version of President Donald Trump’s “One Big, Beautiful Bill Act” pass into law, hospital systems are already worried about reliable funding sources years down the line.
In a state heavily reliant on Medicaid with sub-par Medicare reimbursements, many are bracing for the impact of rural hospital closures on an already strained statewide health care system.
The Senate version of the bill, particularly, in addition to gutting rural health care resources via Medicaid cuts, will put even greater demand on large regional hospitals that are currently struggling to accept patient transfers from rural parts of the state, health care advocates and hospital administrators told the Herald-Leader.
“That’s why everyone’s concerned,” said Mark Birdwhistell, senior vice president for health and public policy at the University of Kentucky.
One in three Kentuckians, including children and seniors, get their health care coverage through Medicaid, the federal health insurance program that provides insurance to more than 70 million low-income Americans.
Upwards of 562,000 Kentuckians receive support to buy groceries through the federal Supplemental Nutrition Assistance Program, which provides food assistance to low-income individuals and families.
Under the Senate version of the “Big, Beautiful Bill Act,” roughly 210,000 Kentuckians would lose their Medicaid coverage, 63% of whom live in rural areas, which is more than any other state, Bailey said. An additional 47,000 Kentuckians would lose their coverage through kynect, Kentucky’s version of expanded Medicaid.
Roughly 50,000 Kentuckians are at risk of losing their SNAP benefits under the bill, according to the KyPolicy.
Gov. Andy Beshear, a Democrat, has called Trump’s domestic policy bill “an attack on rural America.”
A ‘double blow’
Beyond the impact on individual Kentuckians, dozens of rural hospitals whose patient populations rely on Medicaid are also at risk of closure and widespread job loss.
Thirty-five hospitals, mostly in rural parts of the state, are at risk of closing under Trump’s “One Big, Beautiful Bill Act” — more hospital closures than any state and representing one-third of all acute and critical access hospitals in the state, according to the University of North Carolina’s Cecil G. Sheps Center for Health Services Research.
Those locations include St. Claire Regional Medical Center in Morehead, Pineville Community Health Center, Three Rivers Medical Center in Louisa, Bourbon Community Hospital in Paris, and several Appalachian Regional Healthcare hospital locations, including in Whitesburg, Middlesboro, Harlan and South Williamson.
Dozens more medical programs and specialties are at risk of being rolled back or cut.
The Senate reconciliation bill would cut Medicaid, the state and federal healthcare program for low-income adults, seniors and people with disabilities, by approximately $1 trillion dollars over 10 years at the same time it preserves $3.4 trillion in tax cuts. The nonpartisan Congressional Budget Office found the Senate bill would add more than $3 trillion to the deficit over the next decade.
The House version of the bill clamped down on Medicaid eligibility, including by adding more work requirements. The Senate version gutted the way Kentucky hospitals are paid in addition to gutting access to Medicaid, which covers 50% of Kentucky’s children and one-third of adults.
“It’s a double blow,” said Jim Musser, senior vice president for policy and government relations for the Kentucky Hospital Association.
KHA recently paid for a television ad urging Kentuckians to contact their Congressional representatives to urge them to “vote against the Big, Beautiful Bill before it’s too late.”
Kentucky hospitals are the largest private employer in the Commonwealth, employing 90,000 people, generating $630 million in state and local taxes, and contributing $14 billion to the state’s economy, Kentucky Hospital Association CEO Nancy Galvagni wrote in a pleading letter to Congress, asking Kentucky’s delegation to vote against the bill.
“The human toll that these sweeping reductions will have on one of the poorest and most health-challenged states is unfathomable,” Galvagni wrote in the letter, which is co-signed by 39 hospital systems.
“Hospitals will have no choice but to eliminate services, such as obstetrics, mental health, cancer treatment, and emergency care,” she wrote. This will lead to lay offs at health care facilities statewide but most concentrated in Eastern Kentucky, where hospitals are one of the largest employers.
”The impact will be felt by everyone, not just Medicaid patients,” Galvagni said. “All patients will suffer from these cuts because without the current state directed payment program hospitals will be forced to close services used by all patients, not just those on Medicaid.”
Ripple effect on Kentucky hospitals
At the same time the amount Kentucky hospitals receive in Medicaid payments will decrease, the amount of free or uncompensated care those hospitals will provide will skyrocket, Musser said.
Hospitals will likely be forced to shut down some services or some hospitals. Hospitals offer very costly care because the community needs it, Musser said.
Closures of rural hospitals or the scaling back of services will inevitably cause a spike in patient transfers to larger regional hospitals, including UK HealthCare in Lexington.
Hundreds of people who currently receive Medicaid may lose their eligibility, driving up the number of uninsured people in Kentucky, Musser said.
The Medicaid cuts to the way hospitals are paid would mean that hospitals, who are currently running on a margin of 2% will be running at a margin of -7%, Musser said, citing a national study looking at how the potential cuts to Medicaid would affect hospitals’ bottom lines.
That means hospitals will likely have to lay off staff. Some projections have said as many as 20,000 health care related staff in Kentucky could be cut due to slashing that Medicaid reimbursement rate.
An aspect of the Senate bill Musser and Birdwhistell are particularly concerned with is the proposal to gradually do away with a hospital provider tax that helps increase the Medicaid reimbursement rates to hospitals — or the rates hospitals are paid. Those rates are now about 85% of what a private insurance company would pay, Musser said.
“That’s roughly 85 cents on the dollar of what it costs to provide that care. That’s not what people are charged. That’s the cost.”
Under the Senate bill, those rates would plummet to Medicare rates, which Birdwhistell said are already “woefully inadequate and don’t even reimburse providers in the state of Kentucky. That’s the rub.”
Medicare is a healthcare program largely for people over the age of 65.
The difference between those two rates and other cuts to Medicaid will result in millions of dollars in losses for hospitals, Musser said, which is where the acute impact on rural hospitals will be most felt.
If that happens and rural parts of the state lose their primary medical facility, it will exacerbate the strain on regional hospitals like UK who are already struggling to receive transfer patients, or patients who travel from other parts of the state to get care at a UK medical center, Birdwhistell said.
“If those local hospitals go into jeopardy, where will the people who need medical care go? We are the natural fallback,” but already, “we’re struggling to say yes. We are sometimes having to say no to transfers to UK many more times than we are comfortable doing,” Birdwhistell said.
UK HealthCare is in the top five hospital systems in the nation for its overall percentage of transfer patients from other health care systems. In fiscal year 2023, while the hospital system accepted more than 19,000 transfer patients, due to limited capacity, “space constraints and the need for even more specialists and staffing,” they had to turn away another 2,825 transfer patients.
This continues to be a reality that will only be exacerbated under the Senate version of Trump’s bill, Birdwhistell said.
“That’s why we’re somewhat concerned: if indeed the small rural hospitals do get into jeopardy, where will people go for care? We are the natural default, but will we have the capacity, and will we be able to build what we need to build to meet the needs of the state?” Birdwhistell said.
Musser said the Kentucky Hospital Association is hopeful the House will reject the Senate version of the bill and return to the House version, which still had Medicaid cuts but only to those enrolled in the program. The Kentucky Hospital Association was one of the few Kentucky healthcare groups to back the House bill.
“It was rammed through the Senate very, very quickly,” Musser said. “We are very hopeful that our friends in the House will stand by us.”
Herald-Leader writer Austin Horn contributed to this report.
This story was originally published July 2, 2025 at 5:59 PM.
