Alternative Headline: Rural Michigan Hospitals at Risk
[MM Curator Summary]: Medicaid cuts from Trump’s new law could force closures or service reductions at hundreds of rural hospitals, including several in Michigan.
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Hospitals in rural communities are a vital lifeline for the people they serve, providing necessary health care, employment, and economic stimulation.
Three hospitals in rural Michigan are among hundreds across the country that may now be in jeopardy due to Medicaid cuts included in President Donald Trump’s budget bill, University of North Carolina at Chapel Hill researchers predict.
On July 4, Trump signed into law the One Big Beautiful Bill Act, which is set to slash roughly $1 trillion in Medicaid funding over the next decade. The reductions were made to make room for tax breaks for the wealthiest Americans, which, along with increased spending on Trump priorities such as Immigration and Customs Enforcement, are expected to increase the national debt by $3.3 trillion by 2034, according to the nonpartisan Congressional Budget Office. The CBO also estimated that approximately 12 million people could lose health insurance coverage because of the legislation’s cuts to Medicaid and other health care provisions.
In Michigan, Medicaid provides health care coverage to more than 2.5 million low-income residents. Brian Peters, CEO of the Michigan Health and Hospital Association, said in a July 3 statement that the budget reconciliation bill “is disastrous for access to care for Michiganders and the healthcare providers who care for them.”
“Cuts to funding are cuts to care. Limiting how states can fund their Medicaid programs puts Michigan in an extremely difficult position. If the state can no longer provide the same reimbursement, hospitals will be faced with difficult choices that will include eliminating service lines or even entire facilities,” Peters said. He estimates the new law will cost Michigan hospitals more than $6 billion in total Medicaid funding over the next 10 years.
Rural hospitals in particular rely heavily on Medicaid reimbursements to upgrade their equipment, pay their workers, and generally care for their patients. If those payments disappear, observers say, the health of residents who depend on these facilities and the well-being of local economies that they support could take a turn for the worse.
Following the bill’s passage in the U.S. House of Representatives, Democratic senators wrote a letter in June to experts at the Cecil G. Sheps Center for Health Services Research at the University of North Carolina at Chapel Hill asking them to provide an analysis of how the bill would affect America’s rural hospitals and communities.
In their analysis, UNC researchers found the Republican health care cuts could put over 300 rural hospitals across the country at risk of closure, conversion to a different type of facility, or service reductions.
Three of those hospitals are in Michigan: McLaren Central Michigan in Mount Pleasant; UM Health-Sparrow Carson, previously known as Carson City Hospital, in Carson City; and Ascension Borgess-Lee Hospital in Dowagiac. A fourth Michigan hospital, Aspirus Ontonagon Hospital in Ontonagon, was also named in the report; however, it reportedly ended hospital and emergency services last year and converted to a health clinic.
UNC determined the hospitals were at risk due to increased financial strain, as the hospitals had been operating in negative margins for the last three years.
UM Health-Sparrow Carson, which provides a range of services from cancer care to obstetrics and gynecology, has already gone through a major change in recent years. In 2023, University of Health Michigan acquired the Lansing-based Sparrow Health system to form one of Michigan’s largest hospital systems. The Carson City facility was among the Sparrow hospitals obtained in the deal.
Ascension Borgess-Lee also recently underwent a merger with Indiana-based Beacon Health System. Beacon officially acquired a set of Ascension Borgess hospitals, including the Dowagiac location, on July 1. Hospital mergers can be a sign of a hospital system in financial distress, according to the American Hospital Association, and studies show the practice can lead to higher health care costs for patients without increases in quality. UM Health-Sparrow and Beacon officials at the time of the acquisitions framed them as a way to improve patient care.
Spokespeople for McLaren Central Michigan and UM Health-Sparrow Carson told the Michigan Independent that their hospitals have no plans to close. A representative for Beacon Health System did not respond to a request for comment.
“At University of Michigan Health, we continue to analyze the impact of the budget reconciliation bill, but do not have current plans to close UM Health-Sparrow Carson hospital. However, we remain very concerned about the implications of the federal changes on rural hospitals like Carson, as well as our entire health care system, said Mary Masson, the senior director of public relations at University of Michigan Health-Sparrow, said in an emailed statement.
McLaren Health Care in Mount Pleasant, in an emailed statement provided by its marketing manager, Dave Jones, said it is concerned about significant cuts to federal health care spending, which “could have a devastating and disproportionate impact on people’s ability to efficiently access the necessary care they require.”
Located in the heart of Michigan’s lower peninsula, Mount Pleasant has a population of roughly 21,600 residents and a median income of about $40,000, according to U.S. Census Bureau data. Nearly 8% of residents don’t have health care coverage, the data shows.
“In order to maintain a level of operation, providers would be forced into making difficult decisions, potentially eliminating meaningful services or, in severe circumstances, leading to the closure of facilities entirely,” the McLaren Central Michigan statement said. “While our rural providers have not been immune to the health care industry’s financial challenges of the past several years, those hospitals have remained steadily viable. Through those federal programs, these providers have been able to grow and expand — bolstering their medical staffs while enhancing their care capabilities. Proposed cuts would also put those initiatives in jeopardy.”
“All patients deserve access to quality, timely care, and we are committed to serving our rural communities,” the statement continued. “But we cannot fully do so without the continued support of these programs. For the sustainability of Michigan’s and the nation’s rural health care infrastructure, we appeal to lawmakers to carefully consider the detrimental impact of these cuts and to reconsider them.”
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