THE PINCH OF MEDICAID CUTS in President Donald Trump’s “One Big Beautiful Bill” of tax and spending measures will be felt in nursing homes and hospitals in rural and underserved communities, including ones in or near the Bay Area.
Medicaid is government-funded health coverage for lower-income individuals, as opposed to Medicare, which is funded mostly by a combination of payroll taxes and low premiums for people over age 65.
In a June 12 letter to Trump and Republican leaders in Congress, Senate Democrats said the bill would impose the largest cuts to health care in United States history and cause 16 million people to lose health insurance coverage.
“Already, rural hospitals are struggling,” the letter said. “In 2023, there were 50 fewer rural hospitals than in 2017.”
The letter included a list of 338 rural hospitals across the country that were at risk of being forced to close or stop providing services if the bill passed. Three of them are in or near the Bay Area — Adventist Health Ukiah Valley in Mendocino County, Adventist Health St. Helena in Napa County and Mee Memorial Hospital in Monterey County.
Congress eventually passed the bill and Trump signed it into law on Friday.
The costs of half of the patient days that Californians spend in long-term care facilities are also covered by Medicaid, according to Yvonne Choong, vice president of policy for the California Association of Health Facilities, which represents nursing homes and intermediate care facilities for the developmentally disabled.
“Most nursing homes are funded primarily through Medicare and Medicaid,” said Choong. “There is no commercial insurance benefit for nursing home care, so it’s almost entirely a government funded enterprise. There are residents who pay out of pocket, but that makes up a relatively small amount of the funding that nursing homes get.”
Reduced provider tax hits Medi-Cal
California’s Medicaid program, known as Medi-Cal, is funded jointly by the federal and state governments. The federal government determines each state’s share of funding based on its wealth relative to the national average, according to the Congressional Research Service.
California’s rate is 50% — in other words, the federal government matches every dollar California spends on most Medicaid services with one federal dollar in a 50/50 split. States can raise their share in several ways, including a tax on all hospitals and medical providers. Provider taxes help California distribute support to medical facilities that serve poor communities. Those expenditures are added to California’s 50% share and draw additional federal matching dollars, supporting Medi-Cal without increasing the general tax burden.
The bill will freeze, limit or slowly reduce the provider tax rates, essentially reducing the amount that states can raise to request a match from the federal Medicaid fund. The bill estimates total savings from limits to provider taxes will be $332 billion.
“There is no commercial insurance benefit for nursing home care, so it’s almost entirely a government funded enterprise. There are residents who pay out of pocket, but that makes up a relatively small amount of the funding that nursing homes get.”
Yvonne Choong, vice president of policy for the California Association of Health Facilities
Anthony Cava, a spokesperson for the California Department of Health Care Services, said the state has utilized provider taxes for many years, and it requires periodic legislative/federal approval and reauthorization.
“Revenues from provider taxes are used to support the non-federal share of Medi-Cal expenditures,” Cava said.
He said the bill “significantly limits states’ ability to use provider taxes that have been previously federally approvable, thereby reducing the amount of funding available for the Medi-Cal program.”
Rural hospitals serve poorer communities
Another way the bill cuts Medicaid spending is by changing eligibility and reimbursement rules, targeting non-U.S. citizens and states that expanded Medicaid eligibility during the implementation of the Affordable Care Act and later during the COVID-19 pandemic.
Adventist Health Ukiah Valley is a hospital in Ukiah in Mendocino County. According to the U.S Census, median household income in Ukiah is $67,122, compared to $95,521 in California, and one-fifth of the population is over the age of 65. Sixteen percent of the population lives in poverty, meaning a family’s income is less than the national threshold for covering basic needs, and 7% are uninsured.
In Napa County, Adventist Health St. Helena hospital serves an older community. According to the Census, nearly a third of the population is over age 65 and 11% of the city of St. Helena’s total population is on Medicaid.
Adventist Health spokesperson Japhet De Oliveira said the bill will have a catastrophic impact on access to care for all.
“More than 70% of our patients who enter our hospitals rely on Medicaid and Medicare for their care,” said De Oliveira, referring to their chain of facilities nationwide. “This legislation threatens to widen disparities and undermine the financial stability of hospitals and clinics, which are the lifeline and economic engine of local communities.”
The bill estimates cost savings of $28 billion by limiting the share of medical bills paid by the federal government for immigrants lacking permanent legal status who are treated for emergencies. It estimates another $6.2 billion savings if eligibility is limited to holders of green cards.
Leaving immigrant care vulnerable
“Mee Memorial serves a predominantly Latino and immigrant population, particularly in its King City, Greenfield, and Soledad service areas,” said Rena Salamacha, chief executive officer for the Mee Memorial Healthcare System in Monterey County. “While exact immigrant patient percentages are not known, we know from internal documentation that over 70% of patients are Medi-Cal beneficiaries, many of whom are undocumented or mixed-status farmworkers and families.”
Salamacha said Mee Memorial Hospital is not currently at risk of imminent closure, but sustained underfunding will place it in an increasingly vulnerable position, particularly as a rural hospital with a high Medi-Cal payer mix that provides long-term care for patients with life-threatening conditions.
“All low-income Californians, regardless of immigration status, are eligible for Medi-Cal, including recent expansions under California’s Health4All initiative,” said Salamacha. “Immigrants who are lawfully present may still purchase health insurance through Covered California and are eligible for subsidies.”
She said immigrants lacking permanent legal status cannot access Affordable Care Act marketplaces and rely on Medi-Cal, Emergency Medi-Cal, or local safety net programs.
“If federal Medicaid reductions are paired with restrictive immigration policy, these pathways may narrow, limiting coverage options and increasing uncompensated care burdens on rural hospitals,” she said.
Other impacts, she said, may include fewer immigrant families enrolling in Medi-Cal due to fear of immigration enforcement or misunderstanding of the new rules. She also anticipates an increased burden on Mee’s emergency services as uninsured immigrants delay care until it is absolutely necessary, driving up the cost of uncompensated care.
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