<p class="wp-block-paragraph">Governor Greg Abbott (R-TX) on September 3, 2026, urged the Trump administration to release nearly $10 billion in Medicaid funding, countering concerns from Washington regarding Texas's compliance with regulations.</p>
<p class="wp-block-paragraph">Abbott's statement followed alerts from Texas hospitals indicating they would begin losing $27 million in Medicaid reimbursements daily starting September 2. This loss is linked to the federal government's decision to withhold $9.8 billion from Texas, primarily affecting the state's Comprehensive Hospital Increase Reimbursement Program, which compensates hospitals for Medicaid services.</p>
<p class="wp-block-paragraph">“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,” said Abbott’s press secretary, Andrew Mahaleris, in a statement. “Texas’s financing fully complies with federal law, and Texas health care providers should receive the funding they are due.”</p>
<p class="wp-block-paragraph">The dispute with the Centers for Medicare and Medicaid Services (CMS) relates to Medicaid financing changes implemented through President Donald Trump’s One Big Beautiful Bill Act in 2025. The situation escalated in December and centers on how local authorities tax hospitals.</p>
<p class="wp-block-paragraph">In Texas, hospitals pay over $4 billion annually in taxes to local authorities, which are then transferred to the state and allocated to the Health and Human Services Commission. These funds, along with other eligible taxpayer dollars, constitute the state’s non-federal share of Medicaid payments.</p>
<p class="wp-block-paragraph">The federal government matches this non-federal share from the Health and Human Services Commission with a larger payment, which Texas then distributes to hospitals through its CHIRP program as reimbursements for the difference between Medicaid payments and the actual costs incurred by hospitals for providing discounted medical services.</p>
<p class="wp-block-paragraph">CMS has expressed concerns that Texas is not compliant with the Medicaid financing changes enacted through Trump’s One Big Beautiful Bill and has raised issues regarding the calculation of hospital taxes by local authorities.</p>
<p class="wp-block-paragraph">In an August 7 letter to Health and Human Services Secretary Robert F. Kennedy Jr., Abbott defended the state's practices, asserting that Texas operates within legal parameters and adheres to policies previously accepted by CMS.</p>
<p class="wp-block-paragraph">Abbott indicated that Texas is open to modifying its hospital-tax system to meet CMS’s interpretation in the future, but seeks assurances from the Trump administration that such changes will not result in the loss of billions in federal Medicaid funding or affect the grandfathered status of the taxes, a provision included in Trump’s One Big Beautiful Bill.</p>
<p class="wp-block-paragraph">“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 stated in his 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.”</p>