Texas Groups Urge Federal Government to Scale Back Proposed Medicaid Cuts
The Medicaid Cuts in the Proposed CMS Rule Far Exceed Cuts that Congress Passed Last Year in HR 1
For Immediate Release
July 23, 2026
Contact: Peter Clark, [email protected]
Austin - Texas health groups are urging the federal government to scale back a proposed rule that would cut Medicaid funding for the state by $15.9 billion over 10 years. The draft rule, recently published by the Centers for Medicare and Medicaid Services (CMS), is intended to implement the cuts to “State Directed Payments” that Congress passed last year in HR 1, also known as the One Big Beautiful Bill.
In urging CMS to revise the rule, the Texas Children’s Health Coverage Coalition (CHCC) underscored that the nationwide Medicaid cuts in the proposed rule ($500 billion over 10 years) are much deeper than the cuts Congress outlined in HR 1 ($150 billion over 10 years).
“Around 50% of care provided at children's hospitals in Texas is for patients covered by Medicaid,” said Christina Hoppe, President of the Children’s Hospital Association of Texas (CHAT). “As currently proposed, cuts of this magnitude will restrict access to lifesaving care for children. We urge CMS to align its rules with the congressional intent of Section 71116 and protect the lifesaving care provided at freestanding children’s hospitals.”
In urging CMS to revise the rule, the Texas Children’s Health Coverage Coalition (CHCC) underscored that the nationwide Medicaid cuts in the proposed rule ($500 billion over 10 years) are much deeper than the cuts Congress outlined in HR 1 ($150 billion over 10 years).
“CMS has gone way over statute in these proposed imitations to State Directed Payments. The proposed rule exceeds the federal cuts established in H.R. 1, which lawmakers approved to protect the populations Medicaid in Texas serves—people with disabilities, people who are pregnant, and children,” said Lynn Cowles, Director of Health and Food Justice at Every Texan.
The coalition’s letter to CMS warns that the proposed cuts threaten key services, including labor and delivery units at Texas hospitals, NICUs for medically fragile newborn babies, and mental health services.
Hospitals in rural Texas communities are already struggling to maintain labor and delivery services or even stay open. Over the past six years, 139 rural hospitals stopped delivering babies or plan to stop before the end of this year.
“This is bad news for Texas kids and moms,” said Diana Forester, Director of Health Policy at Texans Care for Children, a member of the CHCC. “Pregnant women in rural Texas are already driving farther and farther to find prenatal care or a hospital where they can deliver their baby. It’s going to get even worse if this proposal goes through.”
For Texas children born with medical fragility or developmental disabilities, the year-round therapies, surgeries, home nurses, and physicians that Medicaid covers are impossible to afford out-of-pocket. Historically, state lawmakers have cut those services when they need to reduce state Medicaid spending because those services are, under federal law, optional to cover.
“We serve children statewide who have every type of developmental disability,” said Linda Litzinger, Advocacy Director at Texas Parent to Parent and member of the CHCC. “Their immense level of medical involvement would be unaffordable without keeping Medicaid at its previous level. Furthermore, Texas has 198,000 children languishing on waiting lists for home and community-based services, such as attendant care, private duty nursing, and respite. The severe $15.9 billion State Directed Payment cuts – 34% of total current SDPs cut by year 4 and 65% by year 10 — would cause Texans to suffer by losing access to both medical and home and community-based services.”
CHCC called on CMS to revise their proposed rule to accord with H.R. 1 and allow states to continue planning for the funding cuts that federal lawmakers have passed on to states.
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