Hospitals stand to lose big in the aftermath of President Donald Trump’s massive budget bill, signed into law July 4.
But for safety-net hospitals, like University Health in Kansas City, which counts on Medicaid for more than half of its patient revenue, the situation looks even more dire.
“All of us are trying not to overreact because many of the provisions have delayed implementations,” said Charlie Shields, CEO of University Health, just before the legislation passed. “But we do understand what the fiscal impact is and what that could mean — not just for University Health, but also for the state of Missouri.”
The new federal law, which is expected to eliminate $1 trillion in federal spending on Medicaid over the next decade, narrowly passed Congress without any support from Democrats. It adds work requirements for people getting Medicaid and forces them to go through more frequent eligibility checks. It also attempts to shift more of the cost of Medicaid to states.
Experts believe the federal legislation could lead to 11.8 million Americans losing health coverage over 10 years, including tens of thousands of people in Missouri and Kansas. In addition, Congress’ expected elimination of Biden-era tax credits that were meant to help more people afford coverage through the Affordable Care Act marketplace will cause even more people to lose health insurance.
“It’s going to be really awful for normal people,” said Amy Blouin, president and CEO of the Missouri Budget Project. “Families who are just trying to get by, who need health care, who need food assistance — we’re taking that away from people.”
What does the Trump bill mean for hospitals?
For hospitals, the bottom line is that the Trump legislation will mean less revenue from insured patients and added costs for treating patients who have no way to pay.
That’s a concern for most hospitals, which often operate on tight margins. But for safety-net hospitals like University Health, formerly known as Truman Medical Center, the consequences may be even worse.
The academic health system, which includes two hospitals in the Kansas City area, already operates on tight margins. In 2024, its operating income was only $3.3 million, on revenue of $932.3 million. And Medicaid accounted for $378.3 million of the system’s $662.3 million in patient care service revenue.
That makes the health system more reliant on the government health program than most other area hospitals. Children’s Mercy, for example, got 35% of its patient service revenue from Medicaid. And St. Luke’s Health System, before its merger with BJC, got 9% of patient revenue from Medicaid.
Shields said it is too soon to know just how the federal legislation will affect University Health. Work requirements and other parts of the bill likely to cause the largest coverage losses won’t take effect until the end of 2026. And there is always a chance, he said, that Congress could delay implementation, as it has done in the past with other changes to Medicaid.
But it is easy to imagine that the hospital will see an increase in expenses related to uncompensated care, he said.
University Health spends about $75 million annually on free care, including price concessions and bad debt. That figure fell by half after Missouri expanded Medicaid in 2021, adding more than 325,000 people to the program.
Shields doesn’t expect the expense to return to the level it was before Medicaid expansion, but some of the coverage gains will be lost and uncompensated care will go up again.
“There’s not an endless supply of money,” he said. “So if you have increases in uncompensated care, you’ve got to pay for that in other ways.”
That may involve asking Jackson County and Kansas City taxpayers to kick in more money to help the hospital cover uncompensated care. The two jurisdictions already provide almost $37 million annually in subsidies to the hospital.
“I think that’s a discussion we would have with our local leadership,” Shields said. “We just don’t know the magnitude at this point.”
Ultimately, he said, the hospital will do everything it can to “figure out how to do more with less” so patient care isn’t affected.
“The last two places we would go would be to cut services to our patients or cut our staff.”
How will the state respond?
In Missouri, 1.2 million children and adults are enrolled in Medicaid, also known as MO HealthNet. In Kansas, where the state has not expanded eligibility parameters, enrollment in the Medicaid program also known as KanCare is 358,000.
Medicaid covers 40% of Missouri births and 31% of Kansas births. In Missouri, it provides health coverage to 36% of children, 36% of adults with disabilities and 65% of nursing home residents. And in Kansas, 30% of children, 30% of adults with disabilities and 58% of nursing home residents rely on Medicaid.
The program is administered by states, but it’s funded jointly by the federal and state governments. How much federal taxes cover depends on the state. But before the new federal law, federal taxes covered 78% of Missouri’s Medicaid program and 65% of Kansas’ program.
Currently, the states rely on taxes collected from hospitals and doctors, known as provider taxes, to cover a bulk of their share of Medicaid. But under the new law those taxes will be capped, so states will have to come up with other money to cover their part or forgo the matching federal dollars.
A spokeswoman for the Missouri Department of Social Services said officials are reviewing the 850-page legislation.
“Our commitment at DSS remains focused on meeting the needs of the state’s most vulnerable populations,” the statement said, “and we will actively communicate with our partners and Missourians as we learn more.”
It’s unlikely Missouri or Kansas will choose to allocate funds from general revenue, most experts agree. They say it’s more likely that services will be cut or providers will be paid a lower reimbursement for care provided to Medicaid patients.
That could force some providers to stop accepting Medicaid patients, making it harder for patients to find the care they need and forcing even more patients to safety-net hospitals like University Health.
Denial through paperwork
Burdensome paperwork requirements in the new legislation are expected to contribute to lost Medicaid coverage, health advocates said.
Recipients will be forced to document work, even though most people collecting Medicaid already have jobs. In both Missouri and Kansas, 70% of Medicaid recipients work. Despite that, many are expected to lose coverage simply because they don’t have time or ability to deal with paperwork requirements.
The same is true for a new requirement that will force people on Medicaid to prove their eligibility every six months. Currently that’s done annually.
“It’s like being asked to do your federal income tax returns twice a year instead of once a year,” Shields said. “That’s a burden on patients and I think it’s a burden on the state.”
He said University Health, which already helps patients meet enrollment requirements, may invest in doing even more of that in an attempt to keep patients enrolled in the program.
In Missouri, an antiquated computer system and an insufficient number of employees available to handle benefit paperwork have been highlighted in recent years. The Missouri Department of Social Services has struggled to efficiently handle enrollment requirements for food stamps and other social programs.
But upgrading systems and adding staff seems unlikely as the state absorbs tax cuts and anticipates a $1 billion budget shortfall, Blouin said.
Industry experts worry Missouri won’t be able to fill funding gaps from lost federal Medicaid spending or adequately meet new bureaucratic requirements, which will lead people to lose their health coverage.
Many expect the state to cut services, similar to what happened 20 years ago when Missouri cut Medicaid to address a state budget crisis.
“We had eligibility reduced, but we also had benefits like dental care and other services eliminated,” Blouin said. “Some of that is going to happen. And it’s going to impact everybody.”
This story was originally published by The Beacon, a fellow member of the KC Media Collective.
