Greg Abbott Issues Dire Warning Over Medicaid Changes

Texas Governor Greg Abbott has issued a sharp warning about proposed changes to Medicaid, claiming they could “strip millions of Americans” from access to healthcare.

In February 2023, the Centers for Medicare & Medicaid Services (CMS) issued a new proposed rule that would change long-standing practices for how states fund the non-federal share of Medicaid payments. In particular, the CMS is pushing for greater oversight of how states use of healthcare provider taxes to help fund their programs.

The Medicaid program, which provides healthcare to nearly 100 million lower-income Americans, is financed by both the state and federal government. The federal government contributes an average 60 percent of reported Medicaid costs.

Most states currently impose taxes on many healthcare services, including hospitals, nursing homes and intermediate care facilities, to help fund their portion of Medicaid costs.

However, the Committee for a Responsible Federal Budget has said that states often use provider taxes to inflate the amount of federal government contributions they receive by simultaneously taxing providers and boosting payments to them. In doing so, states can report higher costs without having to boost net spending.

The CMS is thus proposing a number of changes to the funding model to clamp down on this, including requiring provider payment levels to not exceed average commercial rates.

The proposed changes also stipulate that states will have to report to the CMS the total dollars expended for each state-directed payment (SDP), and that states will have to comply with all federal laws concerning funding sources of the non-federal share as a condition of SDP approval.

In response to the proposals, Abbott urged President Joe Biden to “abandon his new Medicaid policies” and warned they could “devastate the… safety net for elderly and disabled adults, pregnant women and millions of children.”

In a joint letter to Biden on Thursday, Abbott and seven other state governors wrote: “We urge you to reconsider and immediately disavow policies included in a final Informational Bulletin and a proposed rule issued by the Centers for Medicare & Medicaid Services (CMS) that would devastate the Medicaid safety net for elderly and disabled adults, pregnant women, and millions of children in our states and across the country.

“The changes are overly prescriptive, administratively burdensome, and contrary to the interests of the Medicaid beneficiaries who receive services in our states and nation.”

They added: “If CMS nevertheless forges ahead and implements these policies, Medicaid funding could be reduced by $48 billion each year, impacting 49 states that rely on provider taxes to bolster their Medicaid programs. Suffering most would be states like Louisiana, Missouri, Texas, and Florida.

“Texas and Florida alone rely on provider taxes to support more than $8 billion and $2.6 billion, respectively, in critical Medicaid funding each year. Such reductions would harm critical healthcare systems serving our most vulnerable citizens, exacerbating disparities in care.”

The governors added that they remain “committed to protecting state flexibility in Medicaid financing,” and warned that the proposed changes “constitute an immediate threat” to it.

Alongside Abbott, the letter was also signed by Brian Kemp, the governor of Georgia; Brad Little, the governor of Idaho; Kim Reynolds, the governor of Iowa; Jeff Landry, the governor of Louisiana; Mike Parson, the governor of Missouri; Kevin Stitt, the governor of Oklahoma; and Mark Gordon, the governor of Wyoming.

States including Florida and Texas have already sued the CMS over the agency’s demands for closer regulation over what happens with their provider taxes.

Newsweek has contacted the White House and the CMS for comment.