Texas Hospitals Face $27 Million-a-Day Medicaid Funding Loss as Children’s Hospitals Warn of Billions More at Risk
WASHINGTON, D.C. — Defend Forgotten America (DFA) is sounding the alarm that Texas hospitals are facing a major Medicaid funding loss. As Texas enters its new fiscal year, hospitals expect to lose approximately $27 million a day in additional Medicaid funding, while proposed federal changes could eventually cost the state’s children’s hospitals billions more annually.
The immediate shortfall stems from the federal government withholding approval of approximately $9.8 billion in funding for three Texas Medicaid programs, with the largest impact on the Comprehensive Hospital Increase Reimbursement Program (CHIRP). The program provides hospitals with additional funding to help bridge the gap between Medicaid reimbursement rates and the actual cost of treating Medicaid patients.
That funding is particularly important for Texas families because approximately four million low-income Texans are enrolled in Medicaid, the majority of whom are children. Hospitals already face financial pressure when treating Medicaid patients because reimbursement rates often fall below the actual cost of providing care.
At the same time, children’s hospitals are warning that another proposed change by the Centers for Medicare & Medicaid Services (CMS) could cost Texas children’s hospitals up to $2.5 billion annually once fully phased in. Nationally, CMS estimates that changes to state-directed payments could reduce Medicaid spending by roughly $510 billion over ten years.
Earlier this year, Defend Forgotten America released a report, “The Collapse of Pediatric Inpatient Care in California,” examining the state’s shrinking pediatric healthcare infrastructure. The report found that the state’s pediatric healthcare crisis is not simply the result of market pressures, but also of years of policy choices under Governor Gavin Newsom that expanded Medi-Cal enrollment without ensuring hospital infrastructure kept pace with growing demand for care.
California should serve as a warning of what can happen when government healthcare policies expand obligations without ensuring that hospitals have the resources necessary to provide care. Additional federal restrictions that disproportionately affect children’s hospitals risk compounding those pressures elsewhere.
“Texas hospitals are facing a $27 million-a-day funding loss, while children’s hospitals warn that billions more could be at risk,” said DFA Founder and CEO Jenn Pellegrino. “With millions of Texans relying on Medicaid, policymakers cannot ignore what these funding decisions could mean for access to care. We have already seen pediatric capacity disappear in California. Texas families should not have to face the same crisis.”
DFA is calling on federal and state leaders to work together to protect access to pediatric care and ensure Medicaid policy does not accelerate the loss of hospital services, particularly in rural, underserved, and forgotten communities.
About Defend Forgotten America (DFA): Defend Forgotten America was founded by former America First Policy Institute spokesperson Jenn Pellegrino to ensure that federal bureaucrats and D.C. insiders hear from the heartland. Our mission is to give working Americans a voice—to ensure that their needs and stories make their way to Washington. We believe DC health policies should reflect community needs and realities for those in rural and small urban America, supporting fiscal innovation and creative solutions that protect rural and small urban communities and help them thrive.
