Report: 3 Iowa hospitals at risk of closing after Medicaid cuts

Three Iowa hospitals could be forced to close or reduce services as a result of Medicaid funding cuts, the nonpartisan consumer advocacy organization Public Citizen said in a report published March 31.

The One Big Beautiful Bill Act, the budget bill signed in July 2025 by President Donald Trump, included $1 trillion in cuts to Medicaid and other federal health spending over a decade. Iowa Republican Sens. Joni Ernst and Chuck Grassley and Republican Reps. Randy Feenstra, Ashley Hinson, Mariannette Miller-Meeks, and Zach Nunn all voted in favor of the law, which the research organization KFF estimated in August 2025 would cause about 68,000 Iowa residents enrolled in Medicaid to lose coverage by 2034.

“The cuts will be devastating to many low-income and disabled individuals who rely on Medicaid,” the Public Citizen report says. “Moreover, they will have knock-on effects on hospitals that disproportionately serve these communities, deepening the financial strain already plaguing rural and safety-net hospitals and compromising their ability to deliver care, potentially leading many to close.”

Based on an analysis of which hospitals received an average of more than 20% of revenue between 2022 and 2024 from Medicaid, the Children’s Health Insurance Program, and other public assistance programs and which ones averaged negative net profit margins over those years, Public Citizen said 446 hospitals “are at heightened risk of closing or reducing services due to Medicaid cuts.

Three of those hospitals are in Iowa: CHI Health Mercy Council Bluffs in Pottawattamie County, MercyOne Oelwein Medical Center in Fayette County, and Ottumwa Regional Health Center in Wapello County.

An Ottumwa Regional Health Center spokesperson told the Iowa Independent in an email: “Ottumwa Regional Health Center (ORHC) remains stable, fully operational and committed to delivering safe, high-quality care. While proposed Medicaid funding reductions could create additional challenges for rural hospitals across the country, ORHC benefits from the strength and resources of a larger healthcare organization, enabling continued investment in services, technology, and patient care. Our focus remains on advancing our mission of making communities healthier and ensuring access to high-quality care now and into the future.”

The other two hospitals did not immediately respond to a request for comment for this story.

A MercyOne Oelwein spokesperson told the Oelwein Daily Register on June 5 that Public Citizen’s data was outdated and that neither Public Citizen nor the Des Moines Register had verified their information with the hospital: “While all hospitals in Iowa continue to face reimbursement headwinds … MercyOne regularly evaluates operations to ensure we are focusing resources on critical priorities and sustaining high-quality care for the future. MercyOne Oelwein Medical Center continues to adjust and is currently operating from a strong position.”

A separate May 2026 analysis by the nonpartisan Center for Healthcare Quality and Patient Reform identified eight rural Iowa hospitals at risk of closing, two at immediate risk. Some Iowa healthcare providers have already announced closures or service reductions since the law’s enactment, including a MercyOne Ottumwa medical clinic.

Dr. Glenn Hurst, a family practice physician who has worked in Council Bluffs for 15 years, told the Iowa Independent that the community has been served for years by two hospitals, CHI Health and Methodist Jennie Edmundson Hospital, but has seen a drop in healthcare options in recent years.

“We’re also a smaller market that’s really in competition with Omaha, and it gets harder and harder to add primary people here, at any time,” Hurst said. “But certainly when you start looking at quality of life for the provider, when you start looking at access to all the myriad of tools you would want as a provider, those tools are starting to whittle here in Council Bluffs, and so we start to see a whittling down of the number of providers too.”

If CHI Health were to close, Hurst said, patients would have even fewer options: “It’d be detrimental to the community, honestly. There’s value in competition, a lot more value in competition that’s more than just two choices, but without the anchor of that hospital here, then you lose a lot of the primary care providers and a lot of the specialists that were attached to that hospital, and so that’s a loss of access to just your general medical visit, not even your special hospital need. It’s less access to MRIs, less access to CT scans. It becomes a very big problem.”

Benjamin Larson, a Council Bluffs resident, cardiac nurse, and a current Democratic candidate for Iowa state representative, said losing the hospitals would cause a very severe shock in the community. 

“Not only are you suddenly taking away more than half of the ER rooms and locations, a very serious number of hospital beds, you’re also taking away some of the specialist systems that Mercy provides,” Larson observed. “Mercy Hospital in Council Bluffs is actually one of the highest-rated hospitals in all of Iowa, with a B rating. If Mercy shuts down, Iowa as a state is losing one of the highest-rated facilities. It is also going to lose the entire specialty children’s psychiatric department. So just like what we are seeing with Clinton, Iowa, where they have lost their obstetrics and gynecology ward, where pregnant women now have to drive 90 miles north into Des Moines just so they can give birth, we are now going to see another enormous hole up here within the state for healthcare, where there is just no access.”

While Omaha, Nebraska, is just across the Missouri River from Council Bluffs, Hurst said, not all Iowa health insurance plans will pay for out-of-state care: “I’ve had patients who have been trying to work on weight and have tried all the diets and things they can, and we’ve reached the point of trying bariatric surgery, and that they were not going to be covered. These were Medicaid patients, Iowa Medicaid, not going to be covered to see providers in Omaha. They would have to go to Des Moines, and that’s what they did. I’ve had orthopedic patients have that same problem.” He noted that it takes between 90 minutes and two hours to drive to Des Moines from Council Bluffs and that many patients lack reliable transportation.

“We’re already seeing the devastating consequences— just this week two more clinics announced they are closing their doors, hospitals are on the brink of shutdown, and Iowans are being forced to drive farther for basic care while health care workers lose their jobs,” said Amy Adams, director of Protect Our Care Iowa, referencing clinics in Woodbury County. 

Hurst said that while Council Bluffs is “a very blue-collar community” with a significant population covered by Medicaid, any reduction in health services would also harm individuals covered by private insurance plans. “If Medicaid drops and closes the only hospital in your community,” Hurst said, “well, all those people who have insurance have also lost access.”

“The healthcare system right now is becoming feudalized, honestly, where you’re starting to see these walled gardens appearing everywhere,” Larson said. “Right now nationwide, because of the Medicaid cuts, we’re looking at almost 450 hospitals shutting down, or just reducing cares in general. Collectively, that’s over 6 1/2, maybe upwards of 9 million patients that are going to be affected. These cuts will kill millions. There is not a debate to that.”