Medicaid cuts put rural hospitals and economies at risk

President Trump’s “One Big Beautiful Bill Act” (HR 1), passed in July 2025, made massive cuts to Medicaid to pay for tax cuts for the wealthy. Around 31,000 Mainers are expected to lose Medicaid due to new administrative burdens from the bill. Many people who lose Medicaid will have to rely on charity care at hospitals or take on debt, harming Mainers and hospitals alike.

A year ago, analysis from the University of North Carolina identified 338 hospitals at risk of closure due to HR 1, two of them in Maine. MECEP’s analysis of financial data identified two other at-risk Maine hospitals. The four hospitals were Calais Community Hospital, Cary Medical Center, Maine Coast Memorial Hospital (Northern Light Maine Coast Hospital), and Aroostook Medical Center (Northern Light AR Gould Hospital).

Low profit margins leave hospitals with limited funds to cover expenses

All four hospitals have consistently struggled. Over the last five years their average profit margins ranged from -2.5% to 1.9%. Maine Coast Memorial Hospital and the Aroostook Medical Center’s negative margins mean they are already losing money and drawing down their savings to stay open. The others had such small margins that the upcoming loss of Medicaid revenue could push them into the red.

The Maine Health Data Organization tracks hospitals’ cash on hand; how many days a hospital could run with the revenue they currently earn. Due to negative profit margins, Aroostook Medical Center and Maine Coast Memorial Hospital had negative cash on hand in the last three years, meaning every day they still pay for services that happened up to 50 days ago.

Cary Medical Center has positive cash on hand, but it dropped from 127 days in 2020 to 15 in 2024. Calais Community Hospital’s cash has grown recently, but this comes after their bankruptcy and purchase in 2021. Cary Medical Center and Calais Community Hospital have the most sustainable outlook but their cash on hand could turn negative from a significant loss in revenue.

Struggling hospitals will now face Medicaid cuts

Medicaid cuts especially hurt these rural hospitals because they rely on Medicaid more than others. Lower incomes and irregular work schedules for rural Mainers mean they cannot afford private insurance and would struggle to meet new Medicaid eligibility rules. All four hospitals are above the national median for the share of care paid for by Medicaid and Calais Community Hospital and Aroostook Medical Center are above Maine’s high median usage.

Part of the high usage is due to Maine’s 2019 Medicaid expansion which covered tens of thousands of uninsured Mainers. After the expansion, more Mainers were able to pay their medical bills. At Maine Coast Memorial Hospital, uncompensated care dropped from 8.1% in 2018 to 0.3% of charges in 2024. By stripping Mainers of Medicaid, HR 1 will bring uncompensated care closer to pre-expansion levels and further undermine the already shaky financials of these hospitals.

Rural hospitals undermine rural communities’ already struggling economies

MECEP analysis shows an economic gap between the Portland metro area and the rest of the state. Portland metro has higher GDP per capita, lower unemployment, and faster growth. Calais Community Hospital, Aroostook Medical Center, and Cary Medical Center are in Northeastern Maine which has a 15.3% poverty rate, nearly double that of outer Portland.

The Aroostook Medical Center is the largest employer in Aroostook County. The center and Twin Rivers Paper Company are the county’s only private employers with over 500 workers. Cary Medical Center is a major Aroostook County employer, but it is municipally owned. If it were a private company, it would be one of the three largest private employers in the county, while Calais Community Hospital and Maine Coast Memorial Hospital are the fourth largest private employers in their counties. Due to their relatively large number of employees, any disruption to the finances of these hospitals has an outsized impact on the regional economy.

The two hospitals in Aroostook County are major employers, and either one closing would be devastating. If both were to close, the county would lose $113.6 million in wages.

Job losses would affect other sectors as well. Any retailers and subcontractors that serve the hospital and its staff would lose income. Laid off hospital employees may leave the county to find work, reducing the county’s population and economic activity. With the loss of businesses and workers, local governments would have less tax revenue for services. The impact on other parts of the economy would worsen the already significant negative impact of hospital closures.

The impacts of Calais Community Hospital and Maine Coast Memorial Hospital on their local economies are closer to that of Cary Medical Center than Aroostook Medical Center, but they are still major employers.

Maine Coast Memorial Hospital has a nearly identical impact on Hancock County as Calais Community Hospital does on Washington County despite being significantly larger because of the different job markets. Whereas Washington County has no employers with over 500 employees, Hancock County has The Jackson Laboratory which employs over 1,000 residents. The lab’s large staff lessens Maine Coast Memorial Hospital’s economic significance, but the hospital is still a major employer.

Rather than closing, hospitals could deal with Medicaid cuts through layoffs or ending certain services. Layoffs without reducing services would mean fewer jobs, worse job quality for workers, and inferior care for patients. Closing units saves the hospital money but means regions lose critical services. For instance, hospitals often end birthing services to save money. Calais Community Hospital closed their obstetrics department during their bankruptcy and 12 Maine birthing centers have closed over the last decade. Longer drives for critical services can have major health impacts, and the closings cause significant job losses.

Trump’s Medicaid cuts could devastate economies of rural Maine

Hospitals closures would cost Aroostook, Hancock, and Washington counties anywhere from $15.8 to $113.5 million in wages each. The losses would have ripple effects like businesses that service the hospital losing work, closure of retailers that sell to hospital workers and patients, and residents moving away.

Congress passed the Rural Healthcare Transformation Program (RHTP) to compensate for this lost funding, but the funding is woefully insufficient. Maine alone loses $2.5 billion more from Medicaid cuts than it will receive from RHTP, so the fund will do little to stabilize these hospitals and protect jobs.

Reversing the Medicaid cuts is the best solution but would require a change in the political balance in Washington. In the meantime, Maine should work to expand coverage. A state public option could provide universal coverage and reduce uncompensated care. But programs targeted to provide coverage to people who lost their Medicaid would also slow the growth of uncompensated care. The state could consider reimbursing hospitals for uncompensated care but that would not be as helpful to Mainers as providing them with insurance. Whatever form it takes, Maine should do what it can to ensure coverage to protect the health of residents, the viability of rural hospitals, and our local economies.