Trump Administration Pushes for Further Medicaid Funding Cuts Following Congressional Action
From Stat News — May 29th, 2026
Hospitals and healthcare providers are preparing for deeper Medicaid payment cuts after the Trump administration proposed expanding reductions beyond those outlined in the 2025 tax law. The Centers for Medicare & Medicaid Services (CMS) wants to extend limits on state-directed payments and supplemental Medicaid payments, a move that could affect a broader range of services, including behavioral health, dental care, and physician services.
According to Spencer Perlman of Veda Partners, the four provider categories targeted by Congress account for roughly 95% of the expected savings from Medicaid payment reductions, while the additional services CMS proposes to include represent a much smaller share. Perlman also noted that CMS projects significantly higher federal savings than previous estimates, partly due to rapid growth in state-directed payments and the administration's focus on reducing what it views as fraud, waste, and abuse within Medicaid.
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