Texas hospitals face daily $27 million Medicaid funding loss as federal approval stalls
Starting the new fiscal year, Texas hospitals will lose about $27 million each day because the federal government has delayed approval of nearly $10 billion in Medicaid reimbursements.
When Texas’s fiscal year begins on Tuesday, hospitals will begin losing an estimated $27 million per day after the federal government declined to approve about $9.8 billion in Medicaid funding for the coming year. The bulk of the withheld money belongs to the Comprehensive Hospital Increase Reimbursement Program, which pairs local hospital tax collections—about $4 billion annually—with federal matching dollars to offset the shortfall between state-set Medicaid rates and actual service costs.
Hospital officials say the abrupt loss threatens to curtail care for roughly four million low-income Texans, most of whom are children, and could force significant service reductions. Governor Greg Abbott has written to U.S. Health Secretary Robert F. Kennedy Jr., labeling the impasse an economic “gun to the head” and defending the legality of Texas’s tax approach. Federal officials are questioning how local jurisdictions calculate hospital taxes, while state agencies have not provided a response. Even if an agreement is reached by the start of the fiscal year, the funds would likely be delayed for months, further jeopardizing the safety-net health system.
Why it matters
The funding gap could slash essential Medicaid services for millions of low-income Texans.
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