Rural hospitals have always operated on tight budgets. There are more than 1,000 small rural hospitals across the United States. They represent nearly 25% of all the short-term general hospitals1 in the country, but receive less than 3% of total national hospital spending.
Now, they face another financial hurdle: the One Big Beautiful Bill Act (OBBBA). Signed into law by President Donald Trump on July 4, 2025, OBBBA reduces federal Medicaid spending alone by $911 billion2 over ten years. According to Congressional Budget Office (CBO) estimates, this will result in 10 million more people3 becoming uninsured by 2034.
With hospitals struggling financially, benefits are often the first to go. But, is there a solution that allows hospitals to continue to provide coverage for employees?
In this article, we’ll cover OBBBA’s impact on rural communities and how the individual coverage health reimbursement arrangement (ICHRA) offers a solution for controlling benefits spending without compromising coverage.
In this blog post, you’ll learn:
- How many people currently rely on Medicaid.
- How much relief the Rural Health Transformation Program (RHTP), also known as the “rural health fund,” provides.
- How health care providers benefit from ICHRAs.
Rural hospitals are becoming increasingly scarce
In many rural areas, small hospitals often serve as the sole provider of care, unlike urban centers, where multiple options are available for patients. These rural communities typically rely on a single, conveniently located hospital, assuming they have one at all.
A recent report from the Center for Healthcare Quality and Payment Reform4 (CHQPR) found that more than 100 rural hospitals have shut their doors over the past decade. This leaves millions of Americans in these communities without access to emergency rooms, inpatient care, and a range of hospital services that most people across the country take for granted.
Even more hospitals may close in the near future. According to CHQPR, more than 700 rural hospitals, one-third of all rural hospitals in the country, are at risk of closing due to the severity of their financial problems. Does OBBBA seal their fate?
The impact of OBBBA on rural hospital systems
OBBBA has placed increased financial strain on hospitals that serve rural communities.
Medicaid cuts
As of June 2025, there were more than 70 million5 Medicaid enrollees. It’s a lifeline for rural Americans in particular. According to KFF, nearly one in five6 people in rural areas have Medicaid. OBBBA reduces federal Medicaid spending. This federal funding cut will likely lead to higher uninsured rates and increased uncompensated care costs for rural hospitals.
Medicaid work requirements
OBBBA’s Medicaid work requirements7 may leave some people, even those who are working, without coverage. Ongoing eligibility checks, technology barriers, and verification for seasonal or self-employed workers, like farmers, present new obstacles for rural enrollees. When this was implemented at the state level in Arkansas8 in 2018, during President Trump’s first administration, more than 18,000 people lost coverage.
Rural health fund
During debates over Medicaid, lawmakers from both sides voiced concerns about how proposed changes could affect rural hospitals, especially with so many already facing closures. In response, the Senate included an additional $50 billion in President Trump’s bill for the Rural Health Transformation Program (RHTP), also known as the “rural health fund.”
OBBBA’s rural health fund delivers the largest federal investment in rural healthcare since the Medicare Modernization Act of 20039. However, it provides limited relief compared to the long-term losses for rural communities. The rural health fund is a little more than one-third10 of the estimated loss of federal Medicaid funding in rural areas.
Smarter benefits strategies for challenging financial times
When rural community hospitals face rising costs, employee benefits are often the first to go. This is understandable since traditional employer-sponsored group health insurance and self-insured plans are a significant expense, with premiums and claims costs increasing year after year.
When every dollar counts, rural hospitals need a predictable benefits model that doesn’t compromise coverage. The ICHRA allows employers to give their employees a tax-free contribution for individual health insurance premiums, rather than offering a one-size-fits-all group plan.
Here’s why ICHRA makes sense for rural health workforces in a post-OBBBA landscape:
- Cost control. No more surprise renewal increases. With ICHRA, rural healthcare systems set a fixed monthly allowance for employees. This provides full visibility into annual benefits spend.
- Greater flexibility. Rural health providers can tailor ICHRA allowances using 11 employee classes. For example, separating full-time clinical staff from part-time workers.
- Employee choice. With an ICHRA, hospital employees can shop for individual health plans that fit their unique needs and family situations.
- Regulatory compliance. As the healthcare landscape evolves, ICHRAs position employers to adapt quickly. They’re compliant with the Affordable Care Act’s (ACA) employer mandate. They also integrate seamlessly with marketplace coverage options that may change under OBBBA.
- New revenue streams. With a self-funded group plan, the hospital must pay out employee medical claims, even when they seek care at their own facility. With an ICHRA, as long as the hospital is covered by employees’ individual plans, they can seek care at the facility. The hospital can then bill its employees’ insurance carriers for the cost, further reducing overall benefits spending for the year.
Transforming rural hospital benefits with Remodel Health
According to PeopleKeep by Remodel Health’s 2024 Employee Benefits Survey, 92% of employees consider health benefits important. Offering competitive health benefits is key to attracting and retaining skilled clinicians, but it has to be financially viable. ICHRAs help rural hospitals focus on what they do best, caring for patients without sacrificing care for their people.
As a leading ICHRA provider, Remodel Health has helped several hospital groups shift from traditional benefits to a personalized alternative. They significantly reduced costs while continuing to provide comprehensive coverage to their employees.
“Remodel Health has taken the frustration out of providing economical and relevant health insurance options for my employees,” said Frank Beaman, CEO of Faith Community Hospital. “Over the past five years, we have seen millions in savings over a fully or partially self-funded plan, and enjoy a consistent expense that is more easily managed.”
When you use Remodel Health’s ICHRA+ platform, our experts handle:
- Onboarding and support
- Plan design
- Legal plan documents
- Automatic payments for employee individual health insurance premiums
- Required ICHRA plan notices
- Providing necessary data for compliance filings
- In-house enrollment and Medicare support
Your employees can also shop for individual plans right from their Remodel Health account.
Conclusion
The One Big Beautiful Bill Act (OBBBA) is changing federal health care spending and coverage. For rural hospitals navigating rising costs and uncertain Medicaid reimbursements, it’s time to find a solution that aligns with both fiscal responsibility and employee well-being. ICHRAs offer a modern benefits approach, one that can help rural hospitals stay compliant and competitive in a rapidly changing healthcare environment. Want to learn more about ICHRA and how it can benefit your hospital? Schedule a call with Remodel Health to start designing a flexible, cost-effective benefit that works with your budget.
