States grapple with difficult financial choices due to Trump's reduction in health funding allocations

In a series of significant developments, several US states, particularly those in the southern region, are grappling with potential health sector funding cuts. These cuts, linked to nationwide budget laws such as the one signed by Donald Trump in 2017, could lead to project reductions and increased support for nonprofits.

One of the key areas affected is Medicaid, a federal health programme for low-income individuals. Spending reductions in Medicaid stem from the imposition of work requirements on people who've obtained Medicaid under the Affordable Care Act's expansion, as well as other new barriers to coverage. The budget law passed without Democratic support and is expected to reduce federal Medicaid spending by approximately $1 trillion over the next decade.

The implications are far-reaching. For instance, Texas expects to see its federal Medicaid funds reduced by as much as $39 billion over 10 years due to new enrollment barriers. California lawmakers are weighing the impact of these cuts at a general assembly committee hearing. New York Gov. Kathy Hochul warned that the state's health system is bracing for nearly $13 billion in annual cuts.

The cuts could lead to the closure of up to 338 rural hospitals nationwide due to underfunding. In a worrying trend, the Congressional Budget Office estimates that more than 7.5 million people will lose Medicaid coverage and become uninsured due to the law.

States and local governments are responding in various ways. Some are forming advisory groups to track federal changes, suing to try to block the cuts, and reallocating funding. Delaware Gov. Matt Meyer halted a planned project to upgrade and expand the Capitol complex due to a $38 million cut in public health funding from the Trump administration. Hawaii lawmakers are doling out $50 million in grants to nonprofits hit by federal funding cuts.

Meanwhile, the Trump administration has sought to claw back $11 billion in federal public health funds earmarked to states due to the pandemic, leading to a legal fight with a coalition of Democratic-led states. The administration also cut about $1 billion in federal grants for mental health services in schools and halted grants from the National Institutes of Health that provided money to over 90 public universities.

Notably, the cancellation of Operation Border Health, an annual five-day health clinic in Texas' Rio Grande Valley, has left many residents in the predominantly Latino and Hispanic region spanning the Mexican border without access to free medical care.

As the midterm elections approach in November 2026, state leaders are bracing for more cuts. Congressional House Republicans are considering legislation that could bring further cuts, including by slashing the generous cost sharing the federal government provides for 20 million adults who enrolled in Medicaid under the ACA's Medicaid expansion.

In a positive development, New Mexico lawmakers voted to create a trust fund to boost funding for Medicaid, making it the state with the highest percentage of residents enrolled in the programme.

These developments highlight the complex and evolving landscape of US health funding, with far-reaching implications for millions of Americans.

States grapple with difficult financial choices due to Trump's reduction in health funding allocations