COOK — A draconian federal plan to slash nearly $800 billion from Medicaid has rural health care providers across the country sounding the alarm, not just about the dollars, but about the lives hanging in the balance. The bill, already passed by the U.S. House and now under Senate consideration, takes aim at one of the most important funding streams for small-town clinics and hospitals. Around here, losing that support wouldn’t just tighten the budget, it could mean shutting down some services altogether.
That looming threat brought together four local health care leaders last Wednesday night at the Cook Community Center for a public forum on what’s coming and what it could mean for the area. The panel included Teresa Debevec, CEO of Cook Hospital; Keith Harvey, CEO of Scenic Rivers Health Services; Liz Dahl, chair of the Cook Hospital Board; and John Stegmeir, who heads the board’s legislative committee. Longtime Cook resident George Pliml moderated the evening.
What’s in the bill
The bill, dubbed the “One Big Beautiful Bill” by President Donald Trump, calls for sweeping changes to Medicaid eligibility and reimbursement. Among the most dramatic for Medicaid recipients are work requirements for adults aged 19 to 64, monthly eligibility status checks and shorter windows for retroactive coverage. It also clamps down on how states like Minnesota can draw down extra federal support through things like provider taxes and state-directed payments. Some types of care, including gender-affirming treatment and reproductive health services, could be excluded entirely from coverage. Local officials say the result would be fewer patients covered, deeper losses for providers, and serious cracks in the foundations of rural health care.
Cook Hospital impacts
One big unknown, Debevec said, is just how many current patients would lose coverage under the proposed work rules.
“It’s a really hard one to try to estimate based on the way that they’re doing these cuts,” Debevec said.
In 2024, Cook Hospital reported just over $17.6 million in revenue. Of that, nearly $9.5 million went to staff salaries and benefits, and another $720,000 was spent on contracted help to fill persistent gaps in roles like CNAs and imaging techs. Medicaid made up only about 11.5 percent of the hospital’s billings last year, but nearly half the residents in its attached nursing home depend on it. “That’s the part that’s really going to be hit,” Debevec said.
As a Critical Access Hospital, Cook is part of a special category of small, rural hospitals that get reimbursed by Medicare at a slightly higher rate than most larger hospitals. That’s supposed to help keep them financially viable in areas where patient volume is low. But even that support has taken a hit. Under federal budget cuts known as sequestration, Medicare now pays Cook only about 99 percent of what it costs to deliver care, a shortfall that adds up over time.
If the proposed cuts go through and the impact is severe, one option the hospital could consider –though far from ideal – would be converting to a Rural Emergency Hospital, or REH. Debevec emphasized that it’s still unclear exactly how the changes would play out, but the REH model has been floated as a possible response in small communities facing major funding losses. Under this model, Cook Hospital would no longer offer inpatient care, but it could keep providing outpatient services, including lab work and imaging, with slightly better Medicaid reimbursement rates than it receives now.
“That could be an option, but then the inpatients that we do see, which are 700 inpatient days a year, that would have to go away. And our swing beds would have to go away,” Debevec said.
Dahl didn’t mince words about the scale of the threat or its ripple effects.
“If you’re losing money how do you hire more people, give people raises, buy new X-ray equipment? It becomes impossible,” she said. “We are running pretty flat even or a little bit in the black, which is good because we’re always updating the equipment and we want to treat employees right, too. But the sad fact is if these cuts go through, I really fear hospitals will be lost, rural communities will lose major employers and people will lose access to life-saving care.”
And she warned the consequences would fall especially hard on those living with mental illness.
“I think about what may happen to those individuals if you have $800 billion worth of cuts,” Dahl said. “People are going to lose benefits, people are going to lose care and some people will lose lives. And sadly, with the more severe and persistent mental health conditions, many of those people can become dangerous to themselves or others and unable to properly raise their children and such.”
Stegmeir added that while the Minnesota Legislature made important moves this year to shore up hospital finances – including passing a state-directed payment program – that relief may be short-lived. The extra federal Medicaid money tied to that program can only be unlocked if the Centers for Medicare and Medicaid Services approves it in time. If the federal bill passes first, those enhanced payments may never materialize, leaving Minnesota’s hospitals stuck with current reimbursement rates. The state’s application is in progress, he said, but the timeline is razor thin.
The state also restored the provider tax, a small surcharge on hospitals and clinics, back to its original rate of 2 percent, up from the 1.8 percent it had dropped to in recent years. While that might sound like a hit to health care providers, the move actually helps them in the long run. That money isn’t kept by the state – it’s used to boost Minnesota’s share of funding for Medicaid, which is a joint state-federal program. By putting more state money on the table, Minnesota is able to draw down a larger share of federal dollars in return. The result? Much of that money comes right back to the health care system in the form of higher reimbursements for care, effectively multiplying the value of the original provider tax.
Scenic Rivers faces budget hit
Harvey didn’t sugarcoat what’s at stake.
“We don’t make a lot of money. We’re lucky to have a break-even bottom line,” he said. “And we’ve had some years where we’ve lost money.”
With about 70 percent of Scenic Rivers’ patients covered by Medicare or Medicaid, even a modest reimbursement cut would sting. But Harvey said the projected loss is anything but modest – between $1.2 and $1.5 million.
“Take that out of our budget and where is that money going to come from?” he asked. “Seventy percent of our expenses are salaries.”
Raises at Scenic Rivers have been frozen for more than two years.
“One of my concerns is if we don’t start doing something with wages, we’re going to lose employees. And we can’t afford to lose employees because they’re not out there for us to hire them,” Harvey said.
Scenic Rivers operates clinics across an 8,500-square-mile swath of northeastern Minnesota. As a federally qualified health center, it receives about $3.2 million annually in federal support, a grant that’s remained flat for six years. Harvey said the clinic is exploring options like creating school-based health programs to bring in more patients, but they’re limited in what they can offer.
“We don’t have the option of bringing in a general surgeon or doing anything procedural wise – it doesn’t fit within the scope of our operation,” he said. “So, we’re kind of in a box.”
Still, Harvey said they’re not backing down.
“We have to figure out how to make it work,” he said, “and that’s the scary part.”
He urged attendees to contact their representatives in Congress.
“They do listen when you call them, you send them emails,” he said. “They hear it because that’s what they’re looking for. They need to know what we’re thinking about so that they can vote for their constituents.”
Community eyes next steps
The forum ended with a stream of ideas from audience members on how to respond. With the Senate potentially voting before the July 4 recess, the urgency wasn’t lost on anyone. Several suggested circulating petitions at local businesses and public places. Others called for rallies, sit-ins at Rep. Pete Stauber’s offices, or coordinated “days of action.”
One woman pointed out that not everyone in town has internet access, especially older residents, and stressed the importance of in-person advocacy. A rally outside Stauber’s Chisholm office on July 12 is already in the works. And others urged neighbors to submit letters to the editor or speak directly to lawmakers, sharing personal stories about how Medicaid and rural health services have shaped their lives.
Anyone interested in joining local advocacy efforts is encouraged to contact George Pliml at grpliml@gmail.com.