White House proposes deeper Medicaid provider cuts, setting up clash with hospitals

WASHINGTON —

The Trump administration is proposing additional Medicaid provider payment cuts on top of those Congress enacted in 2025, setting up a new fight with hospital and physician groups already strained by the prior round, STAT News reported.

The 2025 reconciliation package narrowed federal matching for several Medicaid populations and trimmed reimbursement rates for hospital inpatient and outpatient services. The new proposal — circulating among Hill committees this week — would extend those reductions and impose new caps on supplemental payment programs that many state Medicaid agencies use to shore up hospital finances.

Hospital industry groups responded sharply. The American Hospital Association said the cuts would “destabilize” providers serving Medicaid-heavy populations, particularly rural hospitals and academic medical centers that rely on Medicaid for a large share of their revenue.

Medicaid covers roughly 80 million Americans, including more than half of all U.S. births and most long-term care for older adults. State Medicaid agencies — which jointly fund the program with the federal government — have warned that deeper federal cuts will force corresponding reductions in state spending or eligibility.

A White House aide told STAT the proposal was part of broader fiscal-year 2027 budget discussions and remained subject to negotiation with Congress.

Sources: STAT News, May 22, 2026