Abbott demands Trump administration restore $10 billion in Medicaid funding

Gov. Greg Abbott (R-TX) on Wednesday increased pressure on the Trump administration to release nearly $10 billion in Medicaid funding, dismissing Washington’s concerns that Texas is not in full compliance with regulations. Abbott’s warning came after Texas hospitals raised the alert that they expected to start losing $27 million in Medicaid reimbursements daily starting Tuesday. The loss is tied to Washington’s move to withhold $9.8 billion from Texas, the bulk of which impacts the state’s Comprehensive Hospital Increase Reimbursement Program, which reimburses hospitals for Medicaid services. “Governor Abbott is ensuring Texans across the state have access to quality healthcare. Texas is working with the Centers for Medicare and Medicaid Services to protect funding that helps hospitals serve Medicaid patients and keeps critical emergency care available,” Abbott’s press secretary, Andrew Mahaleris, told the Washington Examiner. “Texas’s financing fully complies with federal law, and Texas health care providers should receive the funding they are due.” Texas’s fight with the Centers for Medicare and Medicaid Services is tied to Medicaid financing changes enacted through President Donald Trump’s One Big Beautiful Bill Act last year. The current saga came to a head in December, and mostly centers on how local authorities tax hospitals.Every year in Texas, hospitals pay taxes, over $4 billion, to local authorities. Local authorities transfer those taxes to the state, handing them to the Health and Human Services Commission. The funds gathered from hospital taxes, along with other eligible taxpayer dollars, are known as the state’s non-federal share of Medicaid payments. The federal government then matches that non-federal share from HHSC with a larger payment, which Texas distributes to hospitals through its CHIRP program as reimbursements for the gap between what Medicaid paid the hospitals to provide discounted medical services and what it actually costs the hospitals to provide the services. CMS has raised concerns that Texas is not in line with changes to Medicaid financing enacted through Trump’s landmark One Big Beautiful bill in 2025, and has also claimed there are issues with the way local authorities calculate the hospital taxes.Abbott pushed back on such concerns in an Aug. 7 letter to Health and Human Services Secretary Robert F. Kennedy Jr., arguing the state is operating within legal bounds and according to the same policies CMS had previously accepted for years.GROWTH IN RURAL HOSPITALS UNDERCUTS DEMOCRATIC ATTACKS ON ONE BIG BEAUTIFUL BILLThe governor said Texas is still willing to change its hospital-tax system to satisfy CMS’s interpretation going forward, but wants the Trump administration to guarantee the change won’t cause the state to lose billions in federal Medicaid funding associated with the existing system or erase the taxes’ grandfathered status, a provision he said was found in Trump’s One Big Beautiful Bill. “The tax structure previously enacted by the Texas Legislature, and being implemented daily by local governments, fully complies with federal law. What CMS is requesting does not. In fact, CMS’ request directly undermines the protections recently passed by Congress and signed by the President in the One Big Beautiful Bill Act,” Abbott wrote in the letter to Kennedy. “Nevertheless, Texas is willing to request that local governments make updates in accordance with CMS’ newly announced preferences if CMS can provide certain written assurances.”