Potential Effects of the Big Beautiful Bill on Indiana's Rural Hospitals
By: Beau Browning - AttorneySignificant Changes May be Coming to Indiana Rural Hospitals
The “One Big Beautiful Act” (P.L. 119-121) (the “Act”), signed by President Donald Trump on July 4, 2025, introduces significant changes that are expected to effect rural hospitals in Indiana, which provide critical health care services in underserved areas throughout Indiana.
Federal Spending Cuts
Prior to the Act being signed into law on July 4, 2025, rural hospitals in Indiana and nationwide had already been struggling. Nearly half of rural hospitals in America operated at a financial loss in 2023.[1] In Indiana, a quarter of rural hospitals have removed some services as a cost saving measure.[2] Across the country, 92 rural hospitals have closed or ceased providing inpatient services during the past decade.[3]
As a result of the Act, increased service cuts may be on the way due to anticipated federal spending cuts. The terms of the Act are expected to impose more than $1 trillion in cuts to federal spending on Medicaid and with the Affordable Care Act (ACA) over the next decade.[4]
The American Hospital Association (AHA) estimates these cuts will result in 1.8 million Americans in rural communities losing their Medicaid coverage by 2034, including nearly 65,000 Hoosiers.[5] The Act also includes new work reporting requirements and frequent eligibility checks, which could result in additional coverage losses.[6]
Uninsured in Indiana
The uninsured rate in rural areas of Indiana, currently 9 percent, is already higher than the state average; this is consistent with the general trend throughout the United States, where the uninsured rate in rural areas is higher than in urban areas or in all areas combined.[7, 8]
The AHA also estimates the Act will result in a cut in excess of $50 billion in federal Medicaid spending for rural hospitals over the next ten years, including a cut of more than $1.1 billion in spending in Indiana.[9] Nationwide, Medicaid covers approximately one in five payers for rural hospitals.[10] As a result of these cuts, rural hospitals are expected to see a 21 percent decline in Medicaid reimbursement, according to the National Rural Health Association.[11]
New Program to Offset Losses
In an attempt to offset these expected losses, the Act includes a provision called the Rural Health Transformation Program, a $50 billion fund that will be distributed to the states over five years, beginning in fiscal year 2026.[12] Half of these funds will be distributed equally among the fifty states, with the remaining funds distributed among the states in a manner determined by the Administrator of the Centers for Medicare and Medicaid Services (CMS).[13]
The White House has stated this fund will “provide unprecedented new funding to states for a range of uses designed to make rural health care more effective and sustainable for the long term.”[14] However, the National Association of Rural Health Clinics has raised questions as to whether this fund will present a sufficient balance to the expected spending cuts outlined by the Act.[15]
It remains to be seen how the Act, as well as numerous factors such as demographic and geographic trends, impact rural health care.
Sources:
[1], [3], [5], [9] aha.org/fact-sheets/2025-06-13-rural-hospitals-risk-cuts-medicaid-would-further-threaten-access
[6], [10], [11], [12], [13] ruralhealth.us/getmedia/daabe69b-4fdd-4b5a-8e24-b6c22b0ebed4/OBBBA-Talking-Points-7-22-25_1.pdf
[8] rupri.publichealth.uiowa.edu/publications/policybriefs/2025/Health_Insurance_Coverage.pdf
[15] narhc.org/News/31439/What-Trumps-One-Big-Beautiful-Bill-Means-for-Rural-Health-Clinics
Beau Browning – Attorney at Law
Beau Browning concentrates his practice in civil litigation, primarily medical malpractice defense. He defends hospitals, physicians, nurses, nurse practitioners, physician assistants, long-term care facilities, clinics, and other health care providers against medical malpractice claims.
Beau represents providers at all stages of litigation, from the Medical Review Panel through subsequent claims in Indiana state courts and the Indiana Court of Appeals. He has represented individuals and businesses in jury trials in both state and federal courts.
© Riley Bennett Egloff LLP
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Posted: December 2, 2025, by Beau Browning