When Hurricane Helene forced a rural Tennessee hospital into a dramatic rooftop evacuation last September, its top executive vowed to rebuild the damaged facility as he watched the rescue unfold from a washed-out bridge.
That promise is now in peril because of the One Big Beautiful Bill.
Ballad Health CEO Alan Levine “said a prayer” as he ordered more than 50 medical providers and patients at Unicoi County Hospital to go to the roof as floodwaters from the nearby Nolichucky River suddenly surged on Sept. 27, 2024. Hours later, he and state lawmakers watched from the damaged bridge as helicopter crews rescued survivors from the inundated hospital.
“We drove over to the bridge to see it with our own eyes, and it was devastating,” Levine recalled in an interview with POLITICO’s E&E News. “Literally driving back, I said, 'We are going to rebuild this thing, and we are not going to abandon this community.'”
But that was before President Donald Trump pressed Congress in July to pass his big tax and spending law, which slashed more than $1 trillion from health care programs and could lead to an estimated 11.8 million people losing their health insurance. It also included cuts to what’s known as the provider tax, which nearly all states use to increase Medicaid payments to hospitals, in part to help them fund services in rural communities where providing care may not otherwise be financially possible.
By one estimate, the law’s tax cuts could force more than 300 rural hospitals to close. In Erwin, Tennessee, it may mean Unicoi Hospital never reopens, leaving the county without any hospitals or emergency rooms.
“This is going to be a bloodbath if something isn’t changed,” said Levine, a Republican who once led Florida Gov. Ron DeSantis’ health care transition team. “The issue isn’t just about Unicoi and whether it reopens, it will be about how many hospitals we can even keep open.”
The White House did not respond on the record to requests for comment.
The Tennessee hospital was nearly new when Helene destroyed it. When it opened in 2018, it replaced an aging facility nearby that was built in 1953 and had “basically run out of money,” said Levine, who previously served as CEO of the Mountain States Health Alliance.
Located in a 500-year floodplain, the new hospital was constructed on the high-point of its property, at the same elevation as Interstate 26. Ballad Health paid for new levees to help protect it.
“That little hospital was cash-flowing on its own, people were using it, people were proud of it, and then Helene happened,” Levine said.
The levees were no match for the 1-in-5,000-year rainfall event recorded along the Nolichucky River, which rose rapidly over two days after Helene made landfall. The river overran its banks, washed out the interstate and almost reached the roof of the hospital.
Emergency managers warned Ballad to evacuate the hospital around 9:30 a.m. on Sept. 27, but the floodwater rose so quickly that ambulances couldn’t reach the facility. The state sent rescue boats to evacuate the facility about an hour later, but the rescuers became trapped at the hospital as the flooding intensified, rendering it an island surrounded by rushing floodwater and debris.
Fifty-four patients and staff clamored to the roof amid high winds and heavy rain. They waited for hours, until finally being rescued by Virginia State Police helicopter crews. Everyone at the hospital survived, though more than a dozen people died in the flooded river.
Levine, who had previously led health agencies in Florida and Louisiana, has worked through 14 hurricanes as a health care executive.
“I’d never seen anything like what we saw in Helene,” he said.
In the months since, Ballad has taken steps toward rebuilding the hospital. The company found a new location outside the flood zone, and is trying to secure the property. In February, the state of Tennessee and the Federal Emergency Management Agency approved $9.8 million to help fund the hospital’s construction, which Ballad has estimated would cost $50 million.
‘Irreparable harm’
Then came the One Big Beautiful Bill.
An initial House version of the legislation would have frozen provider taxes at current rates — allowing states to continue collecting federal money. But the Senate incrementally lowered the taxes, from 6 percent to 3.5 percent by 2032. Those rates became law. The law also reduces the amount of those taxes that states can pay to hospitals.
Before final passage, some Republican senators expressed concern that the cuts might hurt rural hospitals. That resulted in the creation of a $50 billion fund for those facilities that would be dispensed between 2028 and 2032.
On the day the Senate passed the legislation, the president of the American Hospital Association, Rick Pollack, said he was “deeply disappointed” by the vote.
“It will force hospitals to make service line reductions and staff reductions, resulting in longer waiting times in emergency departments and for other essential services, and could ultimately lead to facility closures, especially in rural and underserved areas,” Pollack said.
The measure will have a big impact at Ballad, which owns about 20 hospitals across Appalachia, all of which serve rural or low-income communities and rely on the provider tax to stay afloat.
Ballad’s annual operating income is about $30 million, said Levine, who estimates that the company will lose $25 million in the first two years of cuts to the provider tax and state directed payments. By 2032, it could lose $125 million annually, he said.
That could push Ballad to close several hospitals, a scenario that threatens to have bigger effects on delivering health care to low-income communities than Helene’s flooding.
“So, if you’re trying to decide to spend $50 million of capital to rebuild a hospital that may have to be closed in three years, it’s an illogical decision,” Levine said.
The rural hospital fund established in the law won’t offset those losses, Levine said, noting that the $50 billion will be spread across 50 states over five years.
“It doesn’t really solve the problem,” Levine said. “It’s a problem that Congress has to lock arms and solve.”
‘Hospitals will close’
Many congressional Republicans expressed concern about the Medicaid cuts in the One Big Beautiful Bill before ultimately voting for it. That includes Sen. Josh Hawley (R-Mo.), who wrote an op-ed in The New York Times in which he said that “slashing health insurance for the working poor … is both morally wrong and politically suicidal.”
“If Congress cuts funding for Medicaid benefits hospitals will close,” he wrote. “It’s that simple.”
Two weeks after he voted for the bill, Hawley introduced legislation to repeal changes to the provider tax and other Medicaid provisions that were enacted under the new law. Hawley’s proposal is supported by the American Hospital Association.
Reps. Morgan Griffith (R-Va.) and Diana Harshbarger (R-Tenn.), who are chair and vice chair of the House Energy and Commerce Subcommittee on Health, have also said they are looking for a solution. Both voted for the One Big Beautiful Bill, and both serve districts that have Ballad hospitals. During a visit to one Virginia facility in July, Harshbarger vowed to “work and make sure that we get the hospital in Unicoi.”
“We just have to figure out what are the steps to get there and where is the funding coming from,” she told a local television station.
A spokesperson for the House energy subcommittee did not respond to requests for comment.
For his part, Levine is lobbying lawmakers to pass legislation like Hawley’s, while deciding what to do in case they don’t.
Levine said he doesn’t fault lawmakers for voting for the One Big Beautiful Bill, which he noted fulfills campaign promises on immigration and taxes.
“I understand that, I’m not critical of people for that,” Levine said. “It’s fair that they wanted to keep their promises, but it doesn’t mean you can’t come back and solve this particular problem.”
Currently, Ballad is “trying to decide what are the services the community needs right now,” and whether Ballad can risk spending money to build the Unicoi hospital without any guarantees that the provider tax and state directed payments will be restored.
Ballad is also exploring whether it could open an emergency department in Erwin, Tennessee, in lieu of fully rebuilding the hospital, but it’s unclear if FEMA funding could be used for that purpose.
“I can be a loyal Republican and advocate for my region at the same time, and there is no way these people in Congress voted for this knowing it will harm rural America to not come back and fix it,” Levine said. “My advocacy is to please do it sooner than later, because we have to make capital decisions right now.”
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