Recent growth in the number of hospitals is undermining claims from Democrats that Republican cuts to Medicaid spending would cause a sweep of health facility closures.
Nearly 500 more healthcare facilities are serving rural and low-income Americans this year than when the GOP passed its major health reform legislation in July 2025, according to new data from the Centers for Medicare and Medicaid Services.
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Democrats claimed cuts in Medicaid spending from the GOP’s One Big Beautiful Bill Act would lead to hospital closures nationwide, chiefly affecting rural areas already struggling with access to care. Republicans since have attempted to rebrand the law as the Working Families Tax Cut as part of an effort to counter Democrat attacks ahead of the midterm elections in November.
The roughly $1 trillion reduction in Medicaid spending over the next decade, Democrats argued, would be catastrophic for rural health centers and federally qualified health centers, which receive extra federal funding to fill regional gaps in care.
But according to a new analysis of the CMS data from the free-market Paragon Health Institute, the number of RHCs and FQHCs has steadily risen since the fourth quarter of 2023, following the passage of the GOP healthcare law, in line with the long-term trend.
Between July 1, 2025, and July 17, 2026, the number of RHCs enrolled in Medicare increased by 148, roughly 2.7%. The number of FQHCs increased by 338, or 3.1%. At the end of the third quarter in 2026, there were more than 11,000 FQHCs and nearly 5,600 RHCs.
A key caveat is that most of the cost-cutting measures in the legislation that concerned Democrats have not yet taken effect. Medicaid work requirements, which critics say will remove enrollees even if they meet the new standards, start in 2027. Changes to the way states collect and use tax revenue to fund Medicaid do not start until 2028.
Liam Sigaud, author of the analysis for Paragon and a research associate at West Virginia University, wrote that, although major changes to the healthcare funding structure have not yet been implemented, there is no evidence so far to support hysteria about the closure of facilities serving rural and low-income patients.
“Alarmist claims that the law’s passage caused the collapse of safety-net providers are simply untethered from reality,” Sigaud wrote.
Precarious state of the healthcare industry
Despite the positive metric for federally supported safety-net hospitals, healthcare facilities on the whole are still in a fragile financial position.
According to a July analysis from the nonpartisan Center for Healthcare Quality and Payment Reform, 700 hospitals in all 50 states are at risk of closure. That includes 264 facilities at an immediate risk of closure due to severe financial strain.
This is slightly less than the projections from May, which estimated 720 hospitals were at risk of closure. Roughly 110 rural hospitals have closed since 2015, according to the CHQP report.
On top of changes from the OBBBA, new proposed regulations from the Trump administration could reduce spending even further, sending hospitals into a lobbying blitz on Capitol Hill and across the states.
CMS recently proposed new rules that would further restrict how states can tax healthcare providers to increase the state’s Medicaid budget, thereby boosting federal matching funds.
Hospital administrators told Politico they were anticipating the hospital industry to lose roughly $340 billion through 2034 under the OBBBA. But if the rules are finalized as proposed, they see hospitals losing $681 billion more than expected.
How hospitals are bracing for changes
But hospital administrators are not sitting idle as the healthcare landscape evolves and are instead implementing business model changes.
Ash Shehata, Managing Director of the healthcare consulting firm Impact Advisors, told the Washington Examiner in April that his company has seen an increase in the volume of clients looking to understand the changes to the system as a result of the OBBBA.
In addition to agency rulemaking and state-level implementation, hospitals also have to brace for private health insurance companies having their own response to the OBBBA that will indirectly affect hospitals.
“I think that a really important way to think about is the effects of the bill, obviously, will roll out over time,” Shehata said.
As patients shift their coverage with changes to Medicaid, Obamacare subsidies, and private insurance, hospitals will have to readjust their revenue models. Shehata said hospital C-suites will need “to figure out how to overhaul their billing systems to really understand what that impact is.”
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He also said hospital systems will likely have to consider new care models for high-cost but low-return services, such as obstetrics and behavioral health. Charitable organizations at the state and local level may need to fill in funding gaps for unprofitable services.
“Many health systems, of course, are based on charity funding, and that might be something we go back to,” Shehata said.
