Rural Americans are facing a deepening healthcare crisis as rising costs, hospital instability, workforce shortages and coverage losses converge in communities that already have fewer medical resources and longer distances to care.

In a media briefing on September 18, hosted by American Community Media in partnership with the Robert Wood Johnson Foundation, health policy experts warned that rural communities could face worsening access to hospitals, maternity care, emergency services and primary care as Medicaid changes, Affordable Care Act marketplace disruptions and long-standing hospital financial pressures take hold.

More than 66 million people live in rural America (about one in five Americans) and speakers said many of those communities are already under strain.

Speakers

  • Dr. Katherine Hempstead, Senior Policy Adviser, Robert Wood Johnson Foundation
  • Dr. Neale Mahoney, Professor of Economics, Stanford University; George P. Shultz Fellow, Stanford Institute for Economic Policy Research
  • Dr. Amy Gordon Bono, Primary Care Physician, Tennessee

The briefing featured Dr. Katherine Hempstead, senior policy adviser at the Robert Wood Johnson Foundation; Dr. Amy Gordon Bono, a primary care physician in Tennessee; and Dr. Neale Mahoney, professor of economics at Stanford University and the George P. Shultz Fellow at the Stanford Institute for Economic Policy Research.

Together, they painted a picture of a rural healthcare system under pressure from both old and new forces: poverty, aging populations, provider shortages, transportation barriers, hospital closures, insurance instability and rising out-of-pocket costs.

A Fragile System Before the Cuts

Dr. Katherine Hempstead said rural communities were already facing serious health challenges before recent federal policy changes.

“Rural areas have inherent health challenges, even in advance of these profound policy changes that we’re talking about today,” Hempstead said.

She said many rural communities have higher poverty rates, declining populations and older residents. Rural populations also tend to have poorer health outcomes than urban populations, including higher rates of chronic disease, smoking, suicide, drug overdose and cancer.

Healthcare delivery is also more difficult and more expensive in rural areas, she said. There are fewer providers per capita, longer travel distances and higher fixed costs for hospitals serving smaller populations.

“We also have very financially fragile health systems, with many small rural hospitals at very low or negative margins,” Hempstead said.

Those conditions, she said, create a fragile baseline. When coverage losses and funding cuts are added, the impact is felt not only by people who lose insurance but by the entire community.

Hempstead said rural hospitals rely heavily on public coverage programs because fewer rural residents receive insurance through an employer. Many rely on Medicaid or Affordable Care Act marketplace plans.

When people lose coverage, hospitals lose revenue and uncompensated care rises.

“That translates into a big revenue problem for hospitals,” Hempstead said. “Of course, it’s an even bigger problem for the people that are losing coverage.”

She said hospital closures or reductions in services affect everyone in a community, including people with Medicare or employer-sponsored insurance. Even if a hospital stays open, it may cut maternity care, chemotherapy or other essential services.

“If people have to travel beyond a certain distance to access healthcare, it really becomes difficult to live in certain places,” Hempstead said.

Farmers and the Self-employed Hit Hard

Hempstead also highlighted the impact on farmers and other self-employed rural workers who rely on the ACA marketplace.

Family farmers, she said, often do not have employer-sponsored insurance and have used ACA marketplace plans to gain coverage. But as enhanced premium tax credits expire, premiums have risen, making coverage less affordable.

“Farmers have had very high rates of enrollment in the ACA marketplace,” Hempstead said. “The increases in premiums that have been recorded recently with the expiration of the enhanced premium tax credits has made that coverage very expensive.”

The issue is especially difficult for older farmers, whose premiums are often higher.

Hempstead also said immigrant farmworkers and other rural immigrant workers face additional barriers. Access to Medicaid varies by state and immigration status, and some people who are eligible may still avoid enrolling because of fears about immigration enforcement.

“We do believe that much of that has to do with people’s concerns about immigration enforcement,” Hempstead said of recent Medicaid enrollment declines. “We also know that the immigration enforcement agency has been trying to get Medicaid data.”

For those without coverage, Federally Qualified Health Centers and free clinics may become increasingly important, she said. But even those options may be underused if families are afraid that interacting with institutions could create immigration consequences.

Rural Health Transformation Fund Falls Short

Speakers also addressed the Rural Health Transformation Program, a $50 billion federal program that will provide funding to states over five fiscal years, from 2026 through 2030.

Hempstead described the fund as an attempt to soften the impact of broader healthcare cuts on rural communities. But she said it is not large enough or direct enough to solve the crisis facing rural hospitals.

“It’s way too small,” she said.

She said much of the money is focused on pilot programs, research, technology and new approaches to care delivery rather than direct support for hospitals facing immediate cash flow problems.

“It’s too upstream,” Hempstead said. “The cash flow problems of rural hospitals are immediate.”

She also warned that the program is temporary.

“The rural health transformation fund is going to be gone in five years, but the problems that have been created by the one big beautiful bill act are not going to be gone,” Hempstead said.

A Doctor’s View from Tennessee

Dr. Amy Gordon Bono, a primary care physician in Tennessee, brought the issue down to the patient level.

She described a patient in her early 60s who worked as a caregiver but could not afford healthcare herself. The patient had been enrolled in an ACA health plan but lost coverage when she could not keep making the payments.

Without insurance, medical care or medication, the patient suffered a stroke and ended up uninsured in a rural hospital.

“The hospital delivering care will not be reimbursed,” Bono said. “The patient suffered a life changing event that was preventable.”

For Bono, the case showed how gaps in coverage harm patients while also contributing to rural hospital instability.

“Her story shows how the healthcare system failing some of us can lead to harm to all of us,” she said.

Bono said Tennessee has repeatedly ranked poorly on healthcare access and outcomes. She said the state is among the worst in the nation for premature death among adults ages 18 to 64, driven by heart disease, substance-related deaths and chronic respiratory illnesses.

She also pointed to Tennessee’s maternal mortality crisis.

“Tennessee is also the worst state in the nation for maternal mortality,” Bono said. “We here in Tennessee experience almost double the national average of maternal mortality.”

Black mothers in Tennessee face an even greater risk, she said, dying at nearly three times the rate of white women. She said about 90% of maternal deaths in the state are considered preventable.

“What connects these two death patterns among younger adults and pregnant patients? Poor healthcare access,” Bono said.

Tennessee has not expanded Medicaid under the Affordable Care Act, which Bono said leaves many low-income adults and workers without access to employer-sponsored coverage uninsured.

Rural Hospitals Under Financial Pressure

Bono said rural hospitals in Tennessee are already delivering uncompensated care to uninsured patients, while Medicaid reimbursement often does not cover the cost of care.

But she said a recent report from the Center for Healthcare Quality and Payment Reform also found that losses from privately insured patients are now a major driver of rural hospital closures.

“We are now also seeing private insurers paying less than the cost of services delivered to privately insured patients,” Bono said.

She said 36% of Tennessee’s rural hospitals are in serious financial trouble and at least 12 are at immediate risk of closure over the next few years.

Bono also warned that hospital consolidation does not always protect patients. She pointed to Ballad Health, a 20-hospital system in Tennessee and Virginia that operates under a state-sanctioned hospital monopoly.

While the consolidation kept facilities open, Bono said specialized departments were heavily consolidated, forcing rural patients to travel farther for critical care. She said emergency room wait times increased, staffing was reduced and the system missed many state-mandated quality benchmarks.

“Distance from specialized healthcare means death,” Bono said.

Workforce Shortages Add Another Layer

Rural communities are also struggling to recruit and retain doctors, nurses and other healthcare workers.

Bono said small towns often have difficulty attracting providers, even with incentive programs. In some cases, older rural doctors are retiring without replacements.

“The people that were serving patients as I was growing up, back in the 80s and 90s, down there, they’re not around anymore, and there’s nobody taking their place,” she said.

She also said limits on visas for healthcare workers can worsen staffing shortages.

“It just means you have less people to care for people,” Bono said. “I don’t think that people understand how much our healthcare system really does depend on the human caring for the human.”

Without enough providers, patients face longer wait times, delayed care and worse outcomes.

Policy Options Ahead

Dr. Neale Mahoney of Stanford University said policymakers are discussing several approaches to address the growing rural healthcare crisis.

The first, he said, is reversing cuts and paperwork requirements that could push people out of Medicaid coverage, as well as extending enhanced premium tax credits for ACA marketplace plans.

Mahoney said ACA subsidies are especially important for people like small family farmers who earn too much to qualify for Medicaid but do not receive insurance through work.

He also said policymakers need to focus not only on whether people have insurance, but whether that insurance actually protects them when they need care.

“In rural communities, 92% of people have insurance coverage,” Mahoney said. “But for many of these people, their insurance isn’t there when they need it.”

Over the last two decades, he said, deductibles for people with employer-sponsored coverage have risen sharply. A family may pay premiums every month but still face thousands of dollars in costs after an emergency.

“As I’ve heard in many conversations, our insurance isn’t insurancing,” Mahoney said.

He said there is growing discussion around capping out-of-pocket costs at reasonable monthly amounts and making insurance more reliable.

Mahoney also said the country needs to confront the link between employment and health insurance.

“If you lose your job, you shouldn’t lose your health insurance,” he said.

He pointed to proposals such as Medicare for All or a public option built on Medicare, saying the larger goal is to ensure people have access to stable, trusted coverage regardless of employment.

Private Equity and Profit Pressures

Mahoney also addressed the role of private equity in healthcare, saying some firms buy rural providers not to improve care but to extract more from the system.

“They may buy up testing facilities, they may buy up other practices, not with the goal of improving the quality of care, not with the goal of generating efficiencies,” Mahoney said. “But with the goal of squeezing more out of the system.”

That can mean reducing compensation for healthcare workers, pursuing medical debt more aggressively or cutting services.

“I think when we have too strong profit maximizing forces in healthcare, it can lead us awry,” he said.

A Breaking Point for Rural Care

By the end of the briefing, all three speakers returned to the same concern: rural healthcare is already fragile, and the next wave of coverage losses, cost increases and hospital financial pressure could push many communities closer to the edge.

Hempstead said rural health was already challenging before the latest policy changes and warned that the Rural Health Transformation Program is “too short term, too upstream and too small” to offset the harm.

Bono said the system is failing patients when profit becomes the center of healthcare decision-making.

“When we treat healthcare as a business, the dollar will always be at the center of every healthcare decision, not the patient,” she said.

Mahoney said the country is facing a moment of intense cost pressure for hospitals, healthcare workers and families, but also a moment when reform may be possible.

For rural communities, the stakes are immediate. A closed hospital can mean longer drives to emergency care. A lost insurance plan can mean skipping medication. A missing doctor can mean months of waiting. And a preventable stroke, maternal death or delayed diagnosis can become the human cost of a system stretched too thin.

 

Images courtesy of American Community Media