Iowa hospitals brace for impact as federal Medicaid cuts loom

Federal Medicaid cuts are expected to strip health care from 86,000 Iowans over the next ten years. One rural hospital administrator warns the financial impact could be felt in months, not years.

When Dr. Robin Plattenberger retired from her Washington County practice eight years ago, she left behind patients who depended on Medicaid for everything from nursing home care to emergency visits. 

Now, as federal budget cuts threaten to strip Medicaid coverage from 86,000 Iowans, she’s watching her former employer, Washington County Hospital and Clinic, prepare for what could be devastating changes.

“There’s really no extra money in a hospital,” said Plattenberger, who recalls her clinic operating on just a 3% margin. “Now you cut back what you’ve had and you just have no choice but to cut service.”

The cuts come as Iowa already faces a healthcare crisis. The state leads the nation in growing cancer rates, while rural hospitals struggle with thin margins and staffing shortages. Patterson said these staffing shortages will be familiar to many rural health providers. 

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The cuts stem from recently passed “One Big Beautiful Bill Act,” federal legislation which Iowa’s entire congressional delegation supported. The hospital in Washington is in US Rep. Mariannette Miller-Meeks’ district. Hospital CEO Todd Patterson pleaded with Iowa’s lawmakers to avoid making cuts to this “lifeline.”

“When Medicaid reimbursements fall short of the cost of care — as they routinely do — we absorb the loss. But we can only do it for so long,” Patterson wrote in May. “Cuts to Medicaid don’t just affect our ability to offer new programs or upgrade equipment; they force decisions about whether we can keep our maternity ward open, retain emergency services, or offer mental health care.”

On Wednesday, Patterson warned the timeline is shorter than many realize. Rather than taking effect years from now, he says hospitals will start feeling the financial squeeze within four to five months as they plan for reduced Medicaid reimbursements under the legislation. Two Iowa hospitals in Newton and Manning appeared on a list of rural providers considered “at-risk.”

Miller-Meeks has defended her vote to cut Medicaid, arguing that its current spending trajectory is unsustainable and would eventually outpace defense spending and debt interest payments if left unchecked. However, critics point out that the same bill significantly increases the national debt by funding tax cuts for corporations and the highest-earners. And one of Miller-Meeks’ possible 2026 opponents is seizing the issue. 

“It’s really ironic that she’s saying that about Medicaid when she literally just voted for a bill that blows up the national debt more than we have seen in a very long time,” Democrat Christina Bohannan  said at a press conference following a tour of Washington Hospital on Wednesday.  

The Tax Policy Center estimates the “One Big Beautiful Bill” will raise the national debt by $4.2 trillion by 2034. That’s 9% of GDP. 

“We are spending less on Medicare and Medicaid than we are spending on interest payments on our national debt. So the fact that [Miller-Meeks]  just signed onto a bill that dramatically increases the debt means that she has lost all credibility to talk about that,” Bohannan said. “We can reduce the debt and still protect people with Medicaid.”