‘A tsunami and an earthquake’: Rural health care braces for Medicaid cuts
North Shore Health and other health care providers are bracing for the effects of H.R. 1, also known as the One Big Beautiful Bill Act.
Changes to Medicaid from the new law are being phased in over several years, with some provisions extending into 2028. In Minnesota, however, some eligibility restrictions took effect Oct. 1.
Beginning Oct. 1, noncitizen adults age 21 or older who are not pregnant and have certain immigration statuses — including refugees, asylees, Afghan and Ukrainian humanitarian parolees, trafficking victims and battered noncitizens — are no longer eligible for federally funded Medical Assistance.
More changes will take effect Jan. 1, 2027, when some adults ages 21 to 64 will be required to meet new work and community engagement requirements to obtain or maintain Medical Assistance coverage. The requirements generally apply to adults who do not live with dependent children, are not pregnant, are not eligible for Medicare and do not qualify for Medical Assistance based on a disability.
People subject to the requirements can qualify through work, school, volunteering, participation in a work program or other qualifying activities. The law also includes exemptions for certain people, including American Indians and Alaska Natives, people who are medically frail and caregivers of people with disabilities.
The changes could cause some people to lose coverage and could create confusion about the status of Medicaid benefits or what documentation is required to maintain coverage.
The Congressional Budget Office projects that changes included in the 2025 reconciliation law will reduce federal Medicaid spending by about $1.2 trillion from 2026 through 2035.
“Part of what we need to look at is where are we vulnerable and how to plan ahead the very best that we can, and so look at things like, you know, our expenses,” North Shore Health CEO Kimber Wraalstad told WTIP. “We still need to look at that and how we can control expenses. We need to make sure that we’re getting every bit of reimbursement that we’re entitled to.”
Wraalstad also highlighted the hospital’s efforts to increase revenue through expanded programs and services. North Shore Health has invested in expanding rehabilitation services and adding offerings through partnerships, including holistic pain management.
However, uncertainty remains over how H.R. 1 will ultimately affect the health care industry.
“So I don’t think it’s possible to prepare ourselves out of a significant federal reduction. I just don’t,” Wraalstad said. “We’re going to continue. We can plan. We’re going to try to become efficient. We’re going to look for those revenue opportunities.”
Bob Hume, vice president of policy at the Minnesota Hospital Association, spoke to the North Shore Health board during its September meeting and compared the situation facing health care providers to an earthquake followed by a tsunami.
The health care industry is already facing workforce and cost pressures. An aging population is requiring more medical care, while health care workers have become more difficult to recruit. Labor, medication, supply, technology and facility costs have also increased.
“We have a cost of labor, we have cost of medications, we have cost of supplies, we have technology, we have to maintain our facilities. All those are cost inputs that we get. And so when they keep talking about, well, you know, hospital costs are increasing and increasing and increasing. Well, they’re increasing because our input costs are increasing,” Wraalstad said. “And it’s putting pressure on healthcare throughout Minnesota.”
Those pressures have contributed to continued consolidation in the health care industry. Most recently, HealthPartners and Essentia Health announced plans to combine their organizations. Pending regulatory approval, the combination is expected to take effect Jan. 1, 2027.
The combined organization would include 22 hospitals and more than 135 clinics across Minnesota, North Dakota and Wisconsin, including Essentia facilities in Duluth.
While consolidation may provide options for some health systems, North Shore Health operates in a frontier community where maintaining access to local services presents different challenges. Wraalstad said federal policymakers may not fully understand the realities facing rural health care providers.
“I don’t think they want to see services like North Shore Health, Sawtooth Mountain Clinic, you know others in remote areas; I don’t think they want those to go away,” Wraalstad said. “I don’t think they understand. I’m sorry, but I don’t think that HHS and CMS always understands what it’s like to be in rural America, because they’re in Baltimore and Washington.”
WTIP spoke to Wraalstad about the impact of the wildfires on the hospital’s financials and what is top of the agenda as we approach the end of 2026. Audio of that conversation can be found below.
Josh Hinke October 7, 2026
