Trump's new law will limit payments to hospitals that treat low-income patients

Critics warn the change to Medicaid will be particularly harmful to rural hospitals struggling to stay afloat.

President Donald Trump’s new tax and spending law will likely force more than half the states to reduce payments to doctors and hospitals that treat Medicaid patients, a change critics warn will be particularly harmful to rural hospitals struggling to stay afloat.

Medicaid, the joint state-federal health insurance program for low-income people, reimburses doctors, hospitals and nursing facilities for treating enrollees. But in many cases, the program doesn’t fully cover the cost of care, straining providers that serve a large share of Medicaid patients.

To help providers cover losses and continue to serve poorer populations, the federal government allows the 41 states, plus the District of Columbia, that have contracted with Medicaid managed care organizations (MCOs) to run their Medicaid programs to direct them to pay providers more — in some cases, as much as commercial plans

Ultimately, taxpayers cover the costs of these so-called state directed payments — and those costs are growing. As of August 2024, the higher payments were projected to add $110.2 billion per year to Medicaid spending, nearly 60% more than the previous year’s projection.

https://stateline.org/2025/09/05/trumps-new-law-will-limit-payments-to-hospitals-that-treat-low-income-patients/