Kentucky as an Example of What is In Store for Rural America with the Medicaid Cuts in Trump’s Tax Bill
American Eclectic posts articles twice a month, on the 1st and 15th. This is the fourth year of publication; previously published articles can be found on my site.
August 1, 2025
In my last article (Trump's Tax Bill and Medicaid: The Burden Shifts to the States, but Will They Be Ready for What Is Coming), I addressed Trump’s tax bill, its cuts to Medicaid beginning in 2028, and the impact on states and their budgets. Here, the focus is on one state: Kentucky. Governor Andy Beshear (D) used the word “devastating” to describe the effect of the Medicaid cuts on Kentucky’s rural communities. He estimated that some 200,000 people in the state could lose Medicaid coverage (currently, approximately 1.38 million Kentuckians are enrolled in Medicaid). That represents a 14.5 percent drop in the number of people on Medicaid. Kentucky is one of seven states with more than 25 percent of the state’s population on Medicaid. Of the estimated 200,000 Kentuckians expected to lose Medicaid, 63 percent live in eastern Kentucky, where 13 percent of the state’s population lives.
Eastern Kentucky includes the Kentucky Appalachians region, which includes Loretta Lynn’s birthplace in Butcher Holler. A New York Times article described the area in less touristy terms:
There are many tough places in this country: the ghost cities of Detroit, Camden and Gary, the sunbaked misery of inland California and the isolated reservations where Native American communities were left to struggle. But in its persistent poverty, Eastern Kentucky — land of storybook hills and drawls — just might be the hardest place to live in the United States. Statistically speaking.
Will the $50 billion hospital fund established in the Trump tax bill legislation be sufficient to keep hospitals operational with the Medicaid cuts? Critics, including the governor, say that it will not cover the cuts in Medicaid spending that will specifically affect rural areas. This is a critical issue, as insufficient funds to cover hospital costs will lead to their closure. Not only will the health of rural Kentuckians be affected, but the economic impact of the Medicaid cuts will affect this region of Kentucky for years to come.
This $50 billion fund, known as the Rural Health Transformation Program, has been touted as the solution to address health disparities between rural and urban communities. The problem is that, by one estimate, the $50 billion figure falls far short of the losses to Medicaid funding that rural areas need—and will need. Medicaid covers approximately 25 percent of the rural population in America, which is higher than the 19 percent of all Americans covered by Medicaid. A Kaiser Foundation study estimates that the cuts this $50 billion fund is supposed to replace will amount to $155 billion—three times greater than the $50 billion figure. In the case of Kentucky, this study estimates that the state will be hit harder than all other states by Medicaid cuts. Kentucky is projected to lose $12 billion, while North Carolina, the state closest to Kentucky in terms of losses, will lose $7 billion.
Developments have been underway for several decades, affecting health demographics and economics of rural America; however, the impact of the upcoming Medicaid cuts is expected to exacerbate the situation.
One reason for addressing Kentucky in this article is that the state faces the prospect of losing the most rural hospitals due to the tax bill's cuts to Medicaid. The Kentucky Center for Economic Policy identifies 35 hospitals as being at risk of closure.
Whitesburg ARH Hospital in Whitesburg, located in Letcher County. Letcher County has a population of approximately 1,700 and is one of the hospitals that will be affected by Medicaid cuts. The ARH in the hospital’s title stands for Appalachian Regional Healthcare. The hospital, as part of the broader ARH system, serves some 400,000 residents in eastern Kentucky and southern West Virginia. As stated in one of its publications:
ARH is the largest provider of care and single largest employer in southeastern Kentucky and the third largest private employer in southern West Virginia. We employ nearly 5,000 people and have a network of more than 600 active and courtesy medical staff members representing various specialties around the region.
The economic impact of ARH is emphasized in its literature, noting that it generates $369 million annually in wages and $32 million in federal, state, and local taxes. The CEO of Middlesboro ARH Hospital emphasized the economic impact of the hospital on Bell County, where it is located, noting that the hospital is the county's second-largest private employer. He did not believe the hospital would close its doors, but reduced Medicaid finances could likely force the hospital to lay off employees. (My assessment, not the CEO’s)
Senator Mitch McConnell’s office (one of Kentucky’s two Senators), as well as Senator Marsha Blackburn of Tennessee, both Republicans, issued somewhat similar statements. McConnell’s statement stated:
Senator McConnell believes we should all be against waste, fraud and abuse while wanting to protect rural hospitals and have safety nets in place for people that need it.
As I pointed out in my last article addressing Medicaid cuts in Trump’s tax bill, do not count on waste and fraud being eliminated as the solution to the problems caused by the Medicaid cuts that are coming. That is just pie-in-the-sky thinking that politicians have used before as a rationale for cuts to any government program. It will not happen, and once that becomes apparent, the problems of Medicaid cuts will affect many.
Of the 35 hospitals the Kentucky Center for Economic Research lists as at-risk of closing with Medicaid cuts, nine (including Whitesburg) are part of the ARH. Of the nine ARH hospitals, they are more than half of the 14 hospitals in the ARH system.(*) In other words, the loss of even, say, a third of the hospitals within the ARH system can have a significant impact on the health of residents in eastern Kentucky and southern West Virginia.
Rural hospitals, such as Whitesburg, are in serious trouble. A 2024 healthcare consulting report backed the findings of the Kentucky Center for Economic Research, noting that 50 percent of rural hospitals are operating at a loss, an increase from 43 percent in their 2023 report. Regarding the change from 43 percent to 50 percent, this report noted the significance of this increase, stating, “The jump from 43% operating in the red last year to 50% this year is the single largest percentage change we have seen in a 12-month period.”
The Medicaid cuts in Trump’s tax cut will exacerbate the problems of healthcare delivery in rural America. Trump may call his bill “One Big, Beautiful Bill Act,” but it will not be so to many of his supporters. Eastern Kentucky supported Trump in 2024, but the shift from Democratic to Republican voting dates back to 2016, when Trump defeated Hillary Clinton. Some voters still refer to themselves as Kentucky Democrats as a means of distinguishing themselves from all other Democrats. Ironically, Trump can do serious harm to some of his most loyal supporters.
Again, it is essential to note that developments have been underway for years before Trump began his second term as President, which have been adversely affecting rural hospitals, rural health in general, and rural economic development—all of which are interrelated. In an earlier article, I addressed some of the problems that have been developing in rural communities (Trump and Rural America: The Irony is His Strongest Supporters Will Feel the Brunt of His Policies). Expect problems to worsen, which could be a legacy of Trump’s second term and his tax bill.
In the case of eastern Kentucky, demographics have been playing a significant role for more than a decade, which matters greatly for healthcare services. As one report stated, “Eastern Kentucky is aging faster than the rest of the state.” The primary reason for this is that younger people are leaving the area. Counties around Letcher, where Whitesburg Hospital is located, are among those counties that have seen the most significant change in median age (the measure used to give insight into considerable change). Knott, Pike, Martin, Floyd, and Magoffin counties have seen significant demographic changes, and those age increases are expected to continue. As a result, the need for medical care will only increase.
Of the five Eastern Kentucky counties mentioned above, Medicaid recipients are a significant part of each county's population: Knott, 49 percent; Pike, 41 percent; Martin, 44 percent; Floyd, 50 percent; and Magoffin-54 percent.
Kentucky already faces a challenge in securing primary care providers. Of the state’s 120 counties, 94 percent of the counties do not have enough providers, according to the Kentucky Primary Care Association. As one researcher familiar with the situation stated:
People are already having trouble getting to doctors or hospitals because of supply issues. If nothing changed, then this is going to become more problematic in the future.
Hospital closures and a lack of primary care providers will lead to an increased number of medical problems and deaths, because there will be fewer facilities treating more patients. As one primary care provider stated:
Over a day, 100-150 patients showing up at another ER would greatly affect their ability to treat those patients in a timely manner. they’re still going to do what they can, how they can.
If time is critical to care, then patients with a brain aneurysm or stroke may end up gambling that time is on their side to be treated before it is too late.
Parkway Regional Hospital in Fulton, Kentucky, closed in 2015. The hospital closed due to a combination of reasons similar to those that led to the closure of other rural hospitals nationwide. Issues such as an aging population that requires care, and state Medicaid reimbursements not covering the care patients receive, are typically reasons for hospital closures. If Medicaid reimbursement rates have been cited as a problem contributing to the closure of rural hospitals before Trump’s tax bill Medicaid cuts go into effect, imagine the situation that will hit in a few years, after it is realized that going after waste and abuse were nothing more than political slogans used as a way to rationalize passing Trump’s tax bill.
In the case of Parkway Hospital closing, the closest hospital for patients to use was 22 miles away in Mayfield, Kentucky. If a patient in an ambulance has to spend more time in the ambulance because it takes longer to transport them to a hospital that is miles away, the impact on the care they receive matters. As one study stated:
Earlier studies found patients were farther from the next [emergency department] ED when a hospital closed.3,4 Others found a greater time and distance traveled to an ED led to greater mortality rates among heart attack and trauma patients.5,6 Intuition suggests that patients are in an ambulance longer after the nearest hospital closes, however, no one has previously measured the travel time change.
This particular study noted the issue that rural patients being transported in an ambulance face with hospital closures:
When hospitals close, one primary concern is how the closure affects rural patients. For those calls defined as rural, the mean transport time one year prior to a closure was 14.2 minutes, one minute slower than the mean time for all calls. The transport time increased to 25.1 minutes after the hospital closed, a statistically significant increase of 10.9 minutes or a 76.4% increase. As a check, we did the same analysis excluding the hospital-based ambulance services. The transport times increased similarly from 13.9 minutes to 25.2 minutes, an 11.3-minute increase. … [P]atients over 64 years old living in rural areas had a similar change in transport times as all rural patients. The times increased from 13.9 minutes to 27.6 minutes, a 13.7 minute or 97.9% increase.
In addition to healthcare issues often associated with an aging population, particularly in eastern Kentucky, at the other end of the age spectrum is the issue of children’s health. The cuts to Medicaid in Trump’s tax bill will affect the Children’s Health Insurance Program (CHIP). Medicaid and CHIP matter to approximately 46 percent of Kentucky’s children and 52 percent of children with special needs.
Nationally, Medicaid covers approximately 30 million children, which is nearly 40 percent of all children in the United States. Medicaid funding has been allocated to school districts. For K-12 schools, Medicaid is the fourth-largest source of financing. In 86 percent of school districts, nurses, psychologists, and speech-language pathologists receive salaries supported by Medicaid funding. Cuts to these districts will put pressure on them to increase property taxes or reduce or eliminate school programs. As one study stated regarding the impact of Medicaid and CHIP cuts (called KCHIP in Kentucky):
Unlike adults, children require age-specific services — newborn intensive care, vaccinations, developmental screenings, and mental health support — that Medicaid currently guarantees. [Cuts] would force states to ration care, risking reductions in critical benefits for children. This change would lead to fewer early interventions for disabilities, cuts to mental health services, and stifled innovation in pediatric care. States would lose the ability and support to respond to health crises, disease outbreaks, or to offer new treatments
In the case of Kentucky, almost 46 percent of school-age children are covered through Medicaid/CHIP, as determined by the school district. The figures are higher for school districts in eastern Kentucky. Above, I addressed five eastern Kentucky counties that have seen demographic increases due to aging. Still, their school districts also show problems ahead due to their greater dependence on Medicaid/CHIP funding, all well above the state average: Knott County School District-76 percent; Pike County School District-61 percent; Martin County School District-76 percent; Floyd County School District-66 percent, and Magoffin School District-71 percent.
A pediatric cardiologist in Louisville stated, “Medicaid and CHIP are lifelines for children and families in our state.”
I have emphasized in some previous articles that, at the current moment, Trump’s cuts to government programs are more speculative, but in a few years, they will be anything but that. The late Daniel Patrick Moynihan, a scholar and former U.S. senator from New York, developed the term “defining deviancy down.” The term refers to how people adapt to change and reconsider what is normal. The situation in eastern Kentucky, resulting from Medicaid cuts, could lead people statewide and nationally to overlook severe and devastating conditions, focusing instead on Loretta Lynn’s birthplace and allowing the touristy aspects to mask the problems of this part of Kentucky that those who live there will face.
Kentucky: Revenue Forecasting, the State Income Tax, and the Coming Medicaid Costs
I have not addressed it here; I plan to in several future articles, but state government revenue forecasting is essential to confronting the coming Medicaid cuts as well as the cuts to the Supplemental Nutrition Assistance Program (SNAP), or food stamps. I have an article planned on SNAP. There is just so much you can reasonably cover in one article. As you can see from what I covered in this article, there will be a significant shift, with state governments beginning to foot the bill for more essential services to their citizens, and revenue forecasting will become even more critical. This article has focused on Kentucky, and beginning January 1, 2026, the state income tax falls to 3.5 percent from the current 4 percent. In light of the increased financial burden that will be placed on the states, revenue will be lost from reducing the Kentucky income tax, which might be needed. The drop in the state’s income tax from 5 percent (where it was in 2022) to 4.5 percent and then a year later to 4 percent might have been acceptable with COVID pandemic relief coming into the state from the federal government and before the passing of Trump’s One Big Beautiful Bill and its coming cuts to healthcare and food stamps. Federal government assistance was needed during the pandemic, but it began to end in 2023. Kentucky’s 6 percent sales tax was expanded in 2023 to cover some 30 additional services (such as personal trainers and website designers), as a way to compensate for the lost revenue from the reductions in the income tax. But, hopefully, the income tax cuts do not come back to haunt the state. Again, I plan to address state revenue forecasting in future articles, which I believe requires more public attention and should be covered in detail on local TV news.
(*) The nine ARH hospitals in the Kentucky Center for Economic Research are: Whitesburg ARH Hospital, Highlands ARH Regional Medical Center, Middlesboro ARH Hospital, Harlan ARH Hospital, Tug Valley ARH Regional Medical Center, ARH Our Lady of the Way Hospital, Mary Breckinridge ARH Hospital, Barbourville ARH Hospital, and McDowell ARH Hospital.
NOTES
About ARH: https://teamarh.org/about-us/
Alex Acquisto and Beth Musgrave, “KY hospitals leaders worry about ‘Big, Beautiful Bill’ effects. ‘Everyone’s concerned’,” Lexington Herald Leader (July 17, 2025): https://www.kentucky.com/news/politics-government/article309797040.html
Allison Black, “I’m a pediatric heart doctor: Medicaid cuts put half of Kentucky kids at risk. Opinion,” courier journal (May 20, 2025): https://www.courier-journal.com/story/opinion/contributors/2025/05/20/medicaid-cuts-kentucky-children-congress-budget-health-insurance/83215940007/
Madison Carmouche, “’Time is everything’: Montgomery co. braces for potential hospital closure,” WKYT (June 26, 2025): https://www.wkyt.com/2025/06/27/time-is-everything-montgomery-co-braces-potential-hospital-closure/?outputType=amp
Kristen Carney, “Kentucky Counties by Population (2025), Kentucky Demographics (December 17, 2024): https://www.kentucky-demographics.com/counties_by_population
Sequoia Carrillo, Cory Turner, Elissa Nadworny, “What the ‘One Big Beautiful Bill’ will change for students, school and colleges,” npr (July 18, 2025): https://www.npr.org/2025/07/17/nx-s1-5459784/trump-school-college-student#medicaid
Joseph Cernik, “Education and Rural America: Interconnected Problems,” in Sherrie Wisdom and Lynda Leavitt, eds., Handbook of Research on Social Inequality and Education (Hershey, PA, IGI Global Scientific Publishing, 2019)
Olivia Dague, “Kentucky hospital CEO fears for future of rural healthcare amid Medicaid cuts,” 10News (June 30, 2025): https://www.wbir.com/article/news/politics/kentucky-hospital-future-orural-healthcare-medicaid-cuts/51-036c73ba-601c-4d5d-9b38-f149556355b4
Fact Sheet: Prescription For Disaster: The Impact Of Proposed Medicaid And CHIP Cuts On Children’s Health, First Focus On Children (March 2025): https://firstfocus.org/wp-content/uploads/2025/03/Prescription-for-Disaster-Medicaid-CHIP-Cuts-Fact-Sheet.pdf
Story Hinckley, “Why these Kentucky Democrats still love President Trump,” The Christian Science Monitor (July 18, 2019): https://www.csmonitor.com/USA/Politics/2019/0709/Why-these-Kentucky-Democrats-still-love-President-Trump
Sarah Ladd, “Kentucky’s population shifted older in a decade. Here’s how and why it matters,” Kentucky Lantern (May 30, 2023): https://kentuckylantern.com/2023/05/30/kentuckys-population-shifted-in-a-decade-heres-how-and-why-it-matters/
Jasmine Laws, “MAGA and Medicaid: Which States Have Highest Percentage of Beneficiaries?” Newsweek (February 19, 2025): https:// www.newsweek.com/maga-medicaid-which-states-have-highest-beneficiaries-2033077
Annie Lowrey, “What’s the Matter With Eastern Kentucky?” New York Times (June 26, 2014): https://www.nytimes.com/2014/06/29/magazine/whats-the-matter-with-eastern-kentucky.html
Monthly Membership Counts by County, Department of Medicaid Services, Cabinet for Health and Family Services (July 14, 2025): https://www.chfs.ky.gov/agencies/dms/stats/KYDWMMCC202507.pdf
Daniel Patrick Moynihan, “Defining Deviancy Down,” American Educator (Winter 1993/1994): https://nation.time.com/wp-content/uploads/sites/8/2012/03/defining-deviancy-down-amereducator.pdf
Dustin Pugel and Ember Jones, “Kentucky Faces the Nation’s Highest Number of Rural Hospitals at Risk of Closure if Congress Cuts Medicaid.” Ky Policy: Kentucky Center for Economic Policy (June 17, 2025): https:// kypolicy.org/35-kentucky-hospitals-at-risk-of-closure-due-to-medicaid-cuts/
Laura Santhanam, “What experts think of the $50 billion rural health fund in Trump’s big bill,” PBS News (July 10, 2025): https://www.pbs.org/newshour/health/what-does-the-rural-health-fund-in-trumps-megabill-do
Heather Saunders, Alice Burns, and Zachary Levinson, “How Might Federal Medicaid Cuts in the Senate-Passed Reconciliation Bill Affect Rural Areas?” KFF (July 2, 2025): https://www.kff.org/policy-watch/how-might-federal-medicaid-cuts-in-the-senate-passed-reconciliation-bill-affect-rural-areas/
Share of Children with Medicaid/CHIP Coverage by School District, 2019-2023, Georgetown University McCourt School of Public Policy, Center for Children and Families: https://ccf.georgetown.edu/2025/03/17/medicaid-chip-coverage-in-kentucky-school-districts-2019-2023/
SuZanne Troske and Alison Davis, “Do Hospital Closures Affect Patient Time in an Ambulance?” Rural & Underserved Health Research Center, University of Kentucky, UKnowledge (February 20, 2019): https://uknowledge.uky.edu/cgi/viewcontent.cgi?article=1007&context=ruhrc_reports#:~:text=Overview%20of%20Key%20Findings,health%20outcomes%20for%20the%20patient.
The Devastating Consequences of Medicaid Cuts, Committee on Aging (May 2023): https://www.aging.senate.gov/imo/media/doc/Kentucky%20Medicaid%20Fact%20Sheet.pdf
Unrelenting Pressure Pushes Rural Safety Net Crisis into Uncharted Territory, Chartis (2024): https://www.chartis.com/sites/default/files/documents/chartis_rural_study_pressure_pushes_rural_safety_net_crisis_into_uncharted_territory_feb_15_2024_fnl.pdf
Jane Wishner, Patricia Solleveld, Robin Rudowitz, Julia Paradise, and Larisa Antonisse, “A Look at Rural Hospital Closures and Implications for Access to Care: Three Case Studies,” KFF (July 7, 2016): https://www.kff.org/report-section/a-look-at-rural-hospital-closures-and-implications-for-access-to-care-three-case-studies-issue-brief/#:~:text=This%20report%20focuses%20on%20three,three%20hospital%20closures%20we%20studied.
