Key facts
- Texas hospitals anticipate a daily loss of $27 million in Medicaid funding starting Tuesday.
- The Trump administration is withholding approximately $9.8 billion in annual Medicaid funding.
- This funding shortfall primarily impacts the Comprehensive Hospital Increase Reimbursement Program (CHIRP).
- Hospitals warn that the loss of CHIRP funding could lead to service cuts for patients.
- Governor Greg Abbott has stated that Texas's hospital tax structure complies with federal law and criticized the funding holdup.
Texas hospitals are anticipating a significant financial blow as approximately $9.8 billion in annual Medicaid funding is set to be withheld by the Trump administration starting Tuesday. This decision primarily affects the Comprehensive Hospital Increase Reimbursement Program (CHIRP), which matches local taxes collected from hospitals to provide additional reimbursement for treating low-income patients.
Hospital officials warn that the loss of these funds, estimated at $27 million per day, could have catastrophic consequences for the state's safety-net healthcare system, potentially leading to service cuts across the board and impacting millions of low-income Texans, including children. Dr. Esmaeil Porsa, CEO of Harris Health, stated that the system could face impacts of at least $258 million in Houston alone, with the region potentially losing up to $1.4 billion annually.
Governor Greg Abbott has strongly opposed the federal government's stance, asserting in a letter to U.S. Health Secretary Robert F. Kennedy Jr. that Texas's method of taxing hospitals fully complies with federal law. Abbott characterized the funding holdup as an economic threat and questioned the federal government's request for restructuring the tax calculation, suggesting it could penalize the state.
Adding to the uncertainty, even if an agreement is reached, a claims backlog is expected to delay the release of funds for at least 90 days, according to the Texas Hospital Association (THA). The THA also noted that the One Big Beautiful Bill Act (OBBBA) included significant Medicaid funding cuts nationwide, impacting states like Texas that did not expand Medicaid under the Affordable Care Act. CMS stated it will review comments for the rules before they are finalized, with the agency previously saying the changes are necessary to rein in misused Medicaid dollars. It remains unclear when both rules will be finalized, but reductions to provider taxes and state-directed payments under the OBBBA start in 2028 and will be phased in over several years.