Trump’s Bill May Lead Hospitals Into Financial Crisis
TL/DR –
The One Big Beautiful Bill Act, signed into law by President Donald Trump in July 2025, presents a significant threat to the credit profile of the U.S. nonprofit hospital sector, according to a report by Fitch Ratings. The Act is expected to cut nearly $800 billion from Medicaid over the next decade, starting in 2027, due to new work, eligibility, and certification restrictions on recipients. This, coupled with the decision by Republican-led Congress to not renew enhanced subsidies for health insurance coverage, has created a “new era of uncertainty” that threatens the strong operating margins and cash positions that nonprofit hospitals have enjoyed over the past five years.
US Hospitals Face Financial Strain Due to Upcoming Cuts by The One Big Beautiful Bill Act
According to a new analysis, US hospitals are set to face significant financial strain due to cuts imposed by The One Big Beautiful Bill Act. This legislation, passed by Congress a year ago, is expected to affect the strong cash and operating positions that hospitals have maintained over the past five years.
Fitch Ratings, in its latest analysis, highlighted the threat to the financial stability of nonprofit hospital systems in the US. The analysis revealed that the operating margins of these hospitals have been on a steady rise for three consecutive years. The margins have increased to a median of 1.5% from 1.1% in the previous year. This followed an all-time low of 0.2% in fiscal year 2022. According to Fitch , these improvements were primarily due to strong volumes, easing labor pressure, and the proactive adoption of new AI tools.
The One Big Beautiful Bill Act and Its Impact
The One Big Beautiful Bill Act, also known as HR 1, enacted by President Trump on July 4 of 2025, is set to impose new work, eligibility, and certification restrictions on Medicaid recipients. The Act is projected to cut nearly $800 billion from the Medicaid health insurance program, affecting poor Americans for the next decade. These cuts are set to begin in January 2027. Fitch, in its report, stated that the Act “represents the dominant near-term threat to the sector’s credit profile,”. They expect that the impact of Medicaid enrollment reductions, stricter eligibility recertifications, work requirements, and caps on provider taxes and state-directed payments will be significantly felt from 2027 onwards.
Hospitals Raise Concerns Over Trump Policies and Other Decisions
Even before the projected effects of the One Big Beautiful Bill Act become apparent, hospitals are voicing their concerns about Trump’s policies and other Republican-led Congressional decisions. One such contentious decision was against 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 for individuals.
HCA Healthcare CEO Sam Hazen emphasized the importance of health insurance coverage for healthcare accessibility and affordability for Americans. He noted that without the enhanced subsidies this year, many people were left uninsured and still needed emergency care from hospitals.
The effects of the withdrawal of subsidies are already being felt, with several health insurers reporting the loss of hundreds of thousands of customers. Centene, for instance, has lost more than two million Obamacare enrollees.
The Post-2025 Scenario: A New Era of Uncertainty
Looking ahead to 2027 and beyond, Fitch analysts warned of a “new era of uncertainty.” They predict that the financial reserves accumulated over the past five years will be tested. “AI-driven efficiencies may need to be accelerated to find margin stabilization,” they wrote. They also posed a crucial question – “Is balance sheet strength overly masking operational fragility?”
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