“This bill will have catastrophic impacts on health care access and affordability in Oregon.” That’s how Becky Hultberg, president and CEO of the Hospital Association of Oregon, described the new federal spending bill that’s sending shockwaves through the state’s health system. With Oregon hospitals already reeling from razor-thin margins and nearly half reporting losses last year, the prospect of $1 trillion in federal Medicaid cuts over the next decade is more than a budget headache—it’s a looming crisis.
The numbers paint a stark picture. Medicaid, known locally as the Oregon Health Plan, covers about 1.4 million Oregonians, or one in three residents. At hospitals like McKenzie-Willamette Medical Center, over a quarter of inpatient discharges in 2024 were Medicaid recipients. For Bay Area Hospital, it’s even higher at 28.4%. These aren’t just statistics—they’re the backbone of community care, and they’re at risk.
The “Big Beautiful Bill” doesn’t just slash funding. It brings a new layer of complexity: starting in 2027, most adult Medicaid recipients in Oregon will need to prove they’re working or volunteering at least 80 hours a month to keep their coverage. While there are exemptions for parents of young children and people with certain disabilities, the Oregon Health Authority estimates that between 150,000 and 200,000 people could lose coverage due to these requirements and the increased paperwork alone (the state health authority estimates).
The experience in other states offers a cautionary tale. When Arkansas rolled out similar work requirements, about 25% of those subject to the rules lost coverage in less than a year—not because they didn’t work, but because they struggled with the reporting process. Research published in Health Affairs found that work requirements did not increase employment but did lead to more medical debt and delays in care. In Georgia, a recent Medicaid work requirement program enrolled just 6,500 adults—far below projections—while costing over $40 million to administer, with most of the money going to bureaucracy, not patient care (KFF reports).
For Oregon’s hospitals, the financial hit is immediate and deep. The state expects to lose $17 billion in Medicaid revenue over the next decade, a 25% drop that could force service cuts, layoffs, or even closures (analysis conducted by a consultant to the Oregon Health Authority). Medicaid currently reimburses Oregon hospitals just 54 cents for every dollar of care provided, and with the new cap on provider taxes, the state’s most important funding tool is being squeezed even tighter (Oregon’s Medicaid program pays hospitals 54 cents per every dollar).
There’s another twist: Oregon’s “Healthier Oregon” program, which covers nearly 95,000 residents regardless of immigration status, now faces a federal penalty that could cost the state $1 billion in just two years if it continues providing this care (the reconciliation bill would force Oregon to cut that coverage). Planned Parenthood clinics, which rely on Medicaid for 70% of patient payments, are bracing for a one-year funding ban that could shutter clinics and leave thousands without access to primary care or cancer screenings.
State leaders are scrambling for solutions. Section 1115 Medicaid waivers have long been a lifeline, giving Oregon flexibility to test new ways to keep people covered even as federal rules shift (Section 1115 Medicaid demonstration waivers). But with the scale of these cuts, even creative strategies may not be enough to plug the gap.
The evidence is clear: most Medicaid adults are already working or face significant barriers to employment, like caregiving or disability. According to KFF, 92% of Medicaid adults under 65 are either working or qualify for an exemption. Yet, administrative hurdles and reporting requirements mean that even those who should keep coverage are at risk of falling through the cracks (KFF analysis).
As the dust settles on this sweeping federal overhaul, Oregon’s health care leaders are left with a daunting challenge: keeping hospitals open and communities healthy in the face of historic funding cuts and new red tape. The coming months will test the resilience and ingenuity of everyone invested in the state’s health system.
