Respiratory therapist Joanna Bielski checks the condition of a Covid-19 patient in the ICU at Rush University Medial Center on January 31, 2022 in Chicago, Illinois. (Photo: Scott Olson/Getty Images)
The gigantic tax and spending bill that President Donald Trump signed over the weekend includes, among others: the largest cuts in health care spending in US history. In response, states are scrambling to protect their hospitals from the impending loss of hundreds of millions in federal funding.
in Georgia, key state panel tardy last month has taken steps to send more state Medicaid money to hospitals, hoping to maximize federal matching dollars before the cuts take effect. Other states are considering recent grant programs that would direct additional money to rural hospitals. Some state legislatures will likely reconvene to discuss how to plug holes in Medicaid budgets.
Tax and Expenditure Act cuts of over $1 trillion from Medicaid, a public health insurance program for low-income people financed jointly by states and the federal government. This action would likely involve payments to hospitals or care facilities decline in at least 29 states– according to an analysis by KFF, a non-profit organization dealing with health policy.
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Faced with such budget shortfalls, states may have to stop offering optional Medicaid benefits such as vision and dental, lower the rates they pay providers – which could reduce access for people enrolled in Medicaid – and change eligibility requirements so that fewer people qualify for coverage.
State policymakers and health experts fear the loss of funding will also threaten hospitals, especially those in rural areas, by increasing uncompensated care and forcing them to cut services or close altogether.
“What will ultimately happen when these hospitals close, what will happen? People will now have to travel longer to get care. They may not even make it,” Dr. Anahita Dua, a vascular surgeon at Massachusetts General Hospital and Southern New Hampshire Medical Center, told reporters last week during a press conference organized by Defend America Action, a group formed to oppose the Trump administration’s policies.
“Ultimately, this will impact not only the lives of people who do not receive this care, but also the majority of hospitals that provide this care and the people who work in these facilities,” she said.
Earlier this month, an analysis by the state’s Health and Value Strategies program at Princeton University estimated that hospitals would lose 18% of their Medicaid funding. almost $665 billion over the next 10 years.
Republicans hailed the mega-bill – officially titled the One Big Beautiful Bill Act – as one that would reduce waste, fraud and abuse in federal programs, secure the U.S. border and spur economic growth. The middle will be to add National debt will raise by at least $3 trillion over the next decade, according to the Congressional Budget Office, and some independent economists have seen it as likely to have little impact on economic growth. Dollars diverted from Medicaid will go toward tax cuts that Trump has prioritized, along with recent spending on immigration control and defense projects.
Reconvening of parliaments
Health policy experts predict that at least some states will have to call their legislatures back into session to address budget holes resulting from Medicaid cuts.
Countries can expect to lose 3%-18% by law, according to the State Health and Value Strategies program report. Arizona, Kentucky and Virginia would see the largest share of their Medicaid dollars evaporate.
Colorado Democratic Governor Jared Polis he said will probably reconvene parliament.
“Almost certainly, if some of these big cuts to Medicaid are implemented … we will probably have to reconvene, depending on what Congress does,” Polis said at the conference press conference in May.
Policymakers in some states have tried to get ahead of expected shortfalls.
The Georgia Department of Community Health advisory board met in tardy June emergency meeting. The board unanimously approved several measures to raise the state’s federal Medicaid reimbursement rate.
For example, the state wants to significantly raise Medicaid payments to hospitals that meet certain goals, such as training Georgia doctors and deliveries. The move would attract an additional $2.1 billion a year in federal money.
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“We are doing everything we can to respond to the Medicaid conversations taking place in Washington,” department Commissioner Russell Carlson told the board at the meeting. “Don’t overreact in this 24/7 news cycle, but gather the best information we can, read the political environment as best we can, and act responsibly.”
Other states have this submitted similar applications with the federal Centers for Medicare and Medicaid Services and received approval in recent months.
“Of all the discussions about Medicaid taking place in Washington,” Carlson said, “the one policy decision that has the potential, depending on how it ultimately ends up, to have the greatest impact on Georgians is the discussion about targeted payment programs.”
Subsidies for hospitals
Some of the biggest federal savings from the recent law come from limiting states’ utilize of financial tools, known as supplier taxwhich allows them to extract more federal dollars. States utilize the extra money to raise hospital reimbursement rates and expand coverage.
Some Republicans in Congress condemned the maneuver as “money laundering program” but a reduction in taxes on suppliers is likely punch immense holes in state Medicaid budgets.
Meanwhile, some state legislatures are looking for alternative ways to raise hospital funding. A bipartisan bill still pending in Pennsylvania would create a rural health care grant program to assist repay student loans for rural doctors, nurses and dentists. Indiana AND Oklahoma during this session, he also considered bills to create grant programs for rural hospitals.
In April, Republican Texas Gov. Greg Abbott announced the state would be exempt over $6 million in the form of grants to support struggling rural hospitals.
Stateline reporter Anna Claire Vollers can be reached at: avollers@stateline.org.
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