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STATES SCRAMBLE TO SHIELD HOSPITALS FROM GOP MEDICAID CUTS  
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Anna Claire Vollers
July 7, 2025
Stateline
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_ Hospitals stand to lose hundreds of millions of dollars under the
new tax and spending law, with rural facilities at particular risk.
Some states are likely to reconvene their legislatures to deal with
funding shortfalls. _

The Thomasville Regional Medical Center in Thomasville, Ala. The
Thomasville Regional Medical Center in Thomasville, Ala., closed in
September after less than five years in operation. State policymakers
and health experts worry that the loss of federal fu, Anna Claire
Vollers/Stateline/TNS

 

The giant tax and spending bill President Donald Trump signed into law
over the weekend includes the biggest health care spending cuts
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in U.S. history. In response, states are scrambling to shield their
hospitals from the looming loss of hundreds of millions in federal
funding.

In Georgia, a key state panel late last month took steps to send more
state Medicaid money to hospitals
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hoping to maximize federal matching dollars before the cuts take
effect. Other states are considering new grant programs that would
funnel additional money to rural hospitals. Some state legislatures
likely will reconvene to discuss how to fill holes in their Medicaid
budgets.

The tax and spending bill cuts more than $1 trillion
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from Medicaid, the public health insurance program for people with low
incomes that’s jointly funded by states and the federal government.
Under the measure, payments to hospitals or nursing facilities would
probably decrease in at least 29 states
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according to an analysis by KFF, a nonprofit health policy group.

Facing such budget shortfalls, states may have to stop offering
optional Medicaid benefits such as vision and dental, reduce the rates
they pay providers — which could shrink access for Medicaid
enrollees — and change eligibility requirements so that fewer people
qualify for coverage.

State policymakers and health experts worry that the loss of funding
also will endanger hospitals, particularly those in rural areas,
driving up uncompensated care and forcing them to cut services or
close entirely.

“Ultimately, when these hospitals close, what happens? People have
to now travel longer for care. They might 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 news conference hosted by Defend America Action, a group launched to
oppose Trump administration policies.

“This is ultimately not only going to affect the lives of the people
that are not going to get the care, but also the majority of the
hospitals that provide this care, and the people that are employed by
those locations,” she said.

Earlier this month, an analysis by the State Health and Value
Strategies program at Princeton University estimated that hospitals
would lose 18 percent of their Medicaid funding, nearly $665 billion
over the next 10 years
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Republicans have hailed the megabill — officially titled the One Big
Beautiful Bill Act — as one that will cut waste, fraud and abuse in
federal programs, secure the U.S. border and spur economic growth. The
measure will add at least $3 trillion to the national debt
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over the next decade, according to the Congressional Budget Office,
and has been scored by some independent economists as likely having
little impact on growth. Dollars diverted from Medicaid will go toward
the tax cuts prioritized by Trump, along with new spending on
immigration control and defense projects.
 

Reconvening Legislatures

Health policy experts anticipate at least some states will have to
pull their legislatures back into session to address gaping budget
holes due to the Medicaid cuts.

States can expect to lose 3 percent to 18 percent of their federal
Medicaid funding over 10 years under the law, according to the State
Health and Value Strategies program report. Arizona, Kentucky and
Virginia would see the largest shares of their Medicaid dollars
evaporate.

Colorado Democratic Gov. Jared Polis has said
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he’s likely to reconvene the legislature. “Almost certainly if
some of these big cuts to Medicaid go through … we would likely need
to reconvene, depending on what Congress does,” Polis said at a news
conference [[link removed]] in May.

Policymakers in some states have tried to get ahead of expected
shortfalls.

In late June, the Georgia Department of Community Health’s advisory
board held an emergency meeting. In a unanimous vote, the board
approved several measures aimed at increasing the state’s federal
Medicaid reimbursement rate.

For example, the state wants to significantly increase Medicaid
payments to hospitals that achieve certain goals, such as training
Georgia doctors and delivering babies. The move would draw down an
additional $2.1 billion per year in federal money.

“We’re doing our best to be responsive to the Medicaid
conversations in Washington,” department Commissioner Russel Carlson
told the board at the meeting. “Not overreacting in this 24/7 news
cycle, but gathering the best information we can, reading the
political environment the best we can, and acting responsibly.”

Other states have filed similar requests
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with the federal Centers for Medicare and Medicaid Services, and
received approval in recent months.

“Of all the Medicaid discussions happening in Washington,” Carlson
said, “one of the policy decisions that could potentially, depending
on how it ultimately lands, impact Georgians the most is the
discussion surrounding directed payment programs.”
 

Grants for Hospitals

Some of the biggest federal savings in the new law come from limiting
states’ use of a financing tool, known as a provider tax
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that enables them to draw down more federal dollars. States use the
extra money to boost reimbursement rates for hospitals and to expand
coverage.

Some congressional Republicans have decried the maneuver as a “money
laundering scheme
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but lowering provider taxes will likely punch big holes
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in state Medicaid budgets.

Meanwhile, some state legislatures are looking at alternate ways to
shore up funding for hospitals. A bipartisan bill still under
consideration in Pennsylvania would create a rural health care grant
program
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to help pay off student loans for rural doctors, nurses and dentists.
Indiana [[link removed]] and Oklahoma
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session to create grant programs for rural hospitals.

In April, Texas Republican Gov. Greg Abbott announced the state would
release more than $6 million
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in grants to support struggling rural hospitals.
 

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* Health Care; Trump Medicaid Cuts; Rural Hospitals;
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