Bluestem Health, a clinic in Lincoln, Nebraska that serves low-income and uninsured patients, has been in the red for the past two years.
And CEO Brad Meyer worries that things could soon get worse for the clinic and its 21,000 patients. That’s because Nebraska is set to become the first state to require certain Medicaid enrollees to work or lose coverage under new rules in President Donald Trump’s One Big Beautiful Bill Act.
“This will have a significant financial impact on our company,” Meyer said. On May 1, seven months earlier than the law requires, states will begin imposing work requirements on eligible adult Medicaid enrollees.
Most of Bluestem’s patients are covered by government programs for people with low incomes or disabilities. Meyer estimates that up to 15% of them could be excluded from Medicaid, which could cost his center about $600,000 a year. That may mean cuts in services and personnel.
Nationwide, approximately 17,000 federally funded community health centers like Bluestem provide care for one in seven Americans. They are bracing for the impact of a law signed by President Trump last year that could cost nonprofit health centers a total of $32 billion over five years, according to the Commonwealth Fund, a health research organization.
Health centers receive federal funding each year, but their largest source of income relies on Medicaid reimbursement for patient care. Government insurance programs covered about half of the approximately 33 million patients in 2024.
The Commonwealth estimates that 5.6 million health center patients will lose Medicaid coverage over the next 10 years as most states enact work requirements. This is a provision of President Trump’s law that requires non-disabled registrants to work, volunteer or perform other approved activities for at least 80 hours a month.
Most people are expected to lose coverage not because they aren’t working, but because of documentation errors, such as not documenting hours worked or not checking whether they qualify for an exemption.
Health center officials say there is no easy way to make up for lost revenue other than cutting staff or services, which will affect all patients. The cuts would come at the same time as an expected increase in patients as people who lose insurance coverage turn to clinics for lower-cost care.
By law, health centers are required to treat all patients, regardless of their ability to pay.
double whammy
Overall, the Congressional Budget Office estimates that about 10 million fewer Americans will have insurance by 2034. That’s because of both President Trump’s law and Congressional Republicans’ decision to cut premium subsidies for health plans in the Affordable Care Act.
“We’re very concerned,” said Jeffrey McKee, CEO of Burlington Regional Health Center in Vermont. His clinic treats about 35,000 patients a year, nearly a third of whom are covered by Medicaid.
He estimates the surge in uninsured patients will result in an additional $3 million in lost revenue. This drop in revenue could jeopardize street care programs and home care for patients over 65, he said.
Most community health centers suffered losses in 2024 due to rising costs and the expiration of pandemic-era relief funds, according to KFF’s analysis.
Centers with higher proportions of uninsured patients are typically in more difficult financial situations, but some are sustained by private donations.
People without insurance, who made up about 18% of all health center patients in 2024, pay on a sliding scale. These amounts are only a fraction of what the insurance company will pay.
The new Medicaid work requirement applies to Washington, D.C., and the 40 states that expanded Medicaid eligibility under the ACA, and applies to adults with incomes up to 138% of the federal poverty level ($22,025 for a single person this year).
Republicans argue that work requirements encourage people to join the workforce and help preserve Medicaid for children and people who are pregnant or disabled. Research by KFF and others shows that most enrollees are already working, attending school, or have health conditions that prevent them from working.
Nebraska takes the lead
The Trump administration has authorized Nebraska to start its work requirement program early, which could affect about 72,000 Medicaid expansion enrollees. State Medicaid officials said they plan to use state and national databases to check whether people are already working or meet exemptions so that most people don’t have to do anything to maintain coverage. But thousands of people still need to prove they meet the requirements.
At Bluestem in Lincoln, Meyer worries that many Medicaid patients won’t take the necessary steps to maintain coverage.
Angelisa Corum, 57, said she loved the care she received from her primary care physician at Bluestem Health over the past dozen years, especially her breast cancer treatment. “I don’t have cancer. They helped me get through it,” she said.
She said her care was the same when she had commercial insurance through her husband’s employer and when she received Medicaid while he was not working.
The work requirement is just part of a Republican law passed last year that could hurt health centers. It would also require more frequent eligibility checks for adults enrolled in Medicaid expansion, which advocates say could also cause people to lose coverage. Currently, many states only require eligibility verification once a year.
The legislation also reduces overall federal Medicaid funding to states, potentially reducing states’ reimbursements to the centers and other health care providers.
The National Association of Community Health Centers, the largest advocacy group for clinics, is trying to walk a tightrope by working with the Trump administration while warning of impending legislative cuts. The group praised Congress for increasing base funding for health centers in the federal budget approved in January.
Kyu Li, CEO of the national association, said the clinics have strong bipartisan support in Washington despite the Medicaid cuts.
He met with Trump administration officials to discuss how health centers can help prevent people from losing insurance due to work commitments. He said these policies could help meet the administration’s other priorities, such as improving the way Americans eat, expanding primary care and focusing on chronic diseases. However, it’s unclear how any of that will lead to funding.
To further demonstrate the reach of health centers, the association recently funded a study that found 52 million people visited clinics over a three-year period. “This is a statement that we serve far more Americans than just one year,” Lee said.
Health center officials hope they can get some of the funding from the $50 billion Rural Health Transformation Program included in the Republican-passed bill. States are scheduled to begin disbursing the first portion of that money this spring.
Lee said he hopes states will have the technology to use databases to check the employment and health status of many registrants and meet “medical frailty” provisions that could avoid disenrollment.
Some people are less optimistic.
“Health centers are bracing for a significant financial impact,” said Sarah Rosenbaum, a health law and policy professor at George Washington University, co-author of the Commonwealth Fund study, and a Medicaid expert. “The way they are responding is the same way health systems typically respond when faced with mass layoffs, facility closures, and service reductions.”
Amanda Pierce-Kelly, CEO of Advocates for Community Health, an industry group representing 52 health centers, said health centers were also particularly concerned about the rising cost of prescription drugs. The impending financial crisis will make it more difficult to hire staff, both in rural areas where doctors and nurses are in short supply, and in densely populated areas where competition for workers is more intense, she told KFF Health News.
“The problem is that health centers are being attacked from all directions,” Piers Kelly said.
