Medicaid Cuts Are Putting Arizona’s Health Care System At Risk

Medicaid, known in Arizona as the Arizona Health Care Cost Containment System (AHCCCS), is crucial to keeping Arizonans healthy. AHCCCS provides health insurance to approximately 1.8 million Arizonans – a quarter of state residents. Medicaid is a program funded jointly by states and the federal government that provides health coverage to low-income families and individuals, who in turn use that coverage to access care at hospitals and healthcare facilities. So when funding is cut, hospitals are left scrambling to respond. 

In July 2025, Congress enacted the Republican Tax Law (H.R. 1), which included the largest Medicaid cuts in history – $930 billion over the next decade – in order to fund tax breaks for the wealthy and big corporations.

Hospital Closures

Medicaid is responsible for about a fifth of all hospital spending, so cuts are bound to send shockwaves through hospital budgets. Medicaid funding cuts could lead to staffing reductions, service cuts, and hospital closures as hospitals lose revenue from AHCCCS reimbursements tied to Medicaid coverage. Medicaid reimbursements help cover the cost of care, so when that funding declines, hospitals must make up the difference by cutting services or staff. Over 600 hospitals nationwide are at risk of closure, up from 300 since the Republican Tax Law was passed. 

Arizona is already experiencing a health care crisis. Multiple healthcare facilities have closed their doors since the passage of H.R. 1, including a mental health clinic for children. More facilities are set to close and reduce services in the coming months. One of the only OB/GYN providers in Pinal County ended its services in August 2026, forcing pregnant women to travel further for care. A hospital in Tucson is also closing its doors in September, which will result in the layoffs of 99 employees. 

Job Losses and Staffing Shortages

Last month, Select Specialty Hospital in Tucson announced it would be closing, leaving 99 employees without jobs just one year after the passage of H.R. 1. Patients received a variety of treatments at the facility, including treatment for brain injuries, cardiac conditions, and infectious diseases.  

The Tucson closure is part of a broader national trend – across the country, hospitals are laying off staff. By 2029, H.R. 1 is projected to eliminate 1.65 million jobs nationwide, with slightly less than half of those losses occurring in health care. Medicaid cuts alone are projected to account for 498,000 health-related job losses.

For those who still have jobs, healthcare providers are facing heavier workloads and greater burnout. Tucson-based president of the National Association of Hispanic Nurses explained, “because of the burnout, we’re losing staff, and I can’t even blame them.” 

Longer Wait Times and Reduced Access to Care

In Arizona, the median emergency room wait time is 176 minutes – nearly three hours. Those times could increase as rural hospitals and clinics are shuttered or reduce services and nearby hospitals absorb additional patients. The consequences of delayed care can be serious.

Rural Arizona Especially Vulnerable

The consequences may be particularly severe in rural Arizona, where hospitals and health care providers already operate with fewer resources and serve communities spread across large geographic areas.

Rural health systems are a lifeline for the roughly one in five Americans who live in rural areas, and cuts to Medicaid will devastate those resources. Medicaid is a significant source of coverage for those who live in rural areas and who would otherwise not be able to afford insurance. Medicaid enrollees are more likely to have regular sources of care and receive preventative care services. Higher rates of Medicaid reimbursement stabilize hospitals in rural communities, making them more sustainable places to work.

Five rural hospitals in Arizona, which collectively serve up to 400,000 Arizonans, are considered to be at-risk of closure, which would force patients to travel further for care. For the 786,000 Arizonans who live in rural areas, the nearest hospital is an average of 20 miles away. Some rural areas have just one behavioral health provider for 50,000 people. Nearly half of rural women must travel more than 30 minutes for maternal health care. 

The system is already stretched thin. H.R. 1's Medicaid cuts threaten to make those gaps even wider. Neal Jenson is the CEO of one such hospital, Cobre Valley Regional Medical Center in Globe, a rural health care center with around a third of its patients on Medicaid. “Anytime you jeopardize a third of your payer base, you will have a significant impact,” Jenson said.

The Bottom Line

For the nearly 1.8 million Arizonans who rely on Medicaid, the consequences of these cuts may be only beginning. As federal funding declines, the effects will ripple beyond individual patients — putting pressure on hospitals and health care providers, threatening jobs, lengthening wait times, and making it harder for rural communities to access care.

H.R. 1 doesn't just put Medicaid coverage at risk. It puts Arizona's health care infrastructure at risk.