Gov. Greg Abbott doubles down on rare fight to support Medicaid funding for Texas hospitals

Texas Gov. Greg Abbott is doubling down on the state’s fight to recover nearly $10 billion in Medicaid funding that the Trump administration is withholding from Texas hospitals.

“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 spokesman Andrew Mahaleris said in a statement.

The statement comes two days after The Texas Tribune reported that the governor’s office had stepped into a nearly year-long impasse between the Texas Health and Human Services Commission and Washington over the funding. The money helps hospitals close the gap between their Medicaid reimbursements and the actual costs they incur for treating low-income Texans.

The money was to go to Texas hospitals beginning Tuesday, the start of the state fiscal year. Each day it is delayed, it costs Texas hospitals about $27 million, according to the Texas Hospital Association.

Texas hospitals pay about $4.2 billion annually to local taxing districts and the federal government matches that amount for the supplemental Medicaid funding.

Beginning last December, the federal government began questioning Texas HHSC, which administers Medicaid for the state, about how those taxes are generated and calculated, indicating the feds would withhold the money until those questions were answered to their satisfaction. But state health officials have insisted there’s nothing wrong with the way this money is collected and nothing has changed in its calculations.

“Texas’ financing fully complies with federal law, and Texas health care providers should receive the funding they are due,” Mahaleris, Abbott’s spokesman said on Wednesday.

Abbott’s statement and his letter to Health Secretary Robert F. Kennedy Jr. last month in which the Republican governor characterized the $10 million hold as an economic “gun to the head” is not only a rare public disagreement with the administration, it’sone of the strongest public stances his office has made in support of Medicaid funding for Texas.

Texas, under Abbott’s watch, is one of the few states that has not expanded Medicaid to more low-income Texans. This has contributed to Texas having the highest uninsured rate in the nation.

Last year, Texas’ health agency had to fight back a brutal measles outbreak as the state endured a clawback of $700 million in unspent COVID funding last year, plus millions more cut in public health funding. Publicly, lawmakers praised the fact that the Trump administration was replacing hundreds of millions in healthcare cuts with a fraction of the loss through smaller grant programs.

The federal government’s scrutiny comes after the One Big Beautiful Bill Act that Congress passed last year that cut $900 million from Medicaid. The brunt of those cuts affected those states that expanded Medicaid, but a provision in the legislation effectively froze Texas’ taxing structure for hospitals, prompting the cutoff on the supplemental funding.

Late Tuesday, a CMS spokesman informed the Tribune that it is committed to ensuring that Medicaid funds are used appropriately but offered no other details about the dispute.

“The agency is working with all states to ensure compliance with both longstanding and recent statutory requirements and remains engaged with the state on these issues,” the agency said in a statement. “CMS will continue to monitor the implementation of these changes and their potential impact on access to care for Medicaid beneficiaries.”

Disclosure: Texas Hospital Association has been a major financial supporter of The Texas Tribune. The Texas Tribune is a nonprofit, nonpartisan news organization that is funded in part by donations from members, foundations and corporate sponsors. Financial supporters play no role in our journalism. Find a complete list of them and more information about our financial and disclosure policies here.