Hospitals Face Financial Struggles Due to Trump’s New Bill

US Hospitals on the Brink of Fiscal Challenge due to the One Big Beautiful Bill Act

The One Big Beautiful Bill Act, passed by Congress a year ago, is set to pose a considerable fiscal challenge to US hospitals, which have been enjoying robust cash and operational positions for the past five years, as per a recent report.

A report by Fitch Ratings released last week reveals that the operating margins of US nonprofit hospital systems have shown a continual rise this year, marking the third straight year of improvements. The operating margins have grown to 1.5% from 1.1% the previous year, an uptrend following a record low of 0.2% in fiscal 2022.

Fitch attributes this performance to strong volumes, relaxed labor pressures, and active operational steps, including the adoption of new AI tools. However, the full impact of emerging policy challenges on the results is yet to be seen.

The One Big Beautiful Bill Act, also known as HR 1, which was signed into law by President Trump on July 4, 2025, could spell trouble for the sector. The Act introduces new work, eligibility, and certification restrictions for Medicaid recipients, which are expected to cut nearly $800 billion from the Medicaid health insurance program for low-income Americans over the next decade. These cuts are set to begin in January 2027.

“The One Big Beautiful Bill Act represents the dominant near-term threat to the sector’s credit profile,” Fitch said in its report. It further outlined that the Act’s policies, including Medicaid enrollment reductions, stricter eligibility recertifications, work requirements, and caps on provider taxes and state-directed payments, will start to have a significant impact beginning in 2027.

Many hospitals are already expressing concerns regarding Trump’s policies and decisions made by the Republican-led Congress, which involved not renewing enhanced subsidies for millions of Americans to buy coverage available on exchanges under the Affordable Care Act (Obamacare). These subsidies, or tax credits, made health insurance premiums more affordable and were enhanced by the Biden administration and the Democratic-controlled Congress through the Inflation Reduction Act of 2022.

HCA Healthcare’s CEO, Sam Hazen, enunciated during his second quarter earnings discussion that “access to healthcare and affordability for Americans begins and ends with health insurance coverage.” He emphasized that most people need support to secure it, whether it is through an employer, the federal government, or some other means.

With the enhanced subsidies becoming unavailable this year, Hazen mentioned that “many people became uninsured and still needed emergency care from hospitals.”

Several health insurers, Centene, in particular, reported the loss of hundreds of thousands of customers, with Centene losing more than two million Obamacare enrollees.

Looking ahead to 2027 and beyond, Fitch analysts stated that the Big Beautiful Bill opens a “new era of uncertainty.”

“The passage of H.R. 1 has introduced a new era of uncertainty, one in which the balance sheet cushion accumulated over the past five years will be tested,” shared Fitch Senior Directors Kevin Holloran and Mark Pascaris in the firm’s report.

“AI-driven efficiencies may need to be accelerated to find margin stabilization,” the Fitch analysts added. “Fiscal 2025 may ultimately prove to be an operational peak for the sector before a new and more challenging chapter begins.”

This article was originally published on Forbes.com.