Hospitals Warn New Medicaid Rules Could Deeply Slash Funding

Hospitals say two CMS proposed rules restricting state taxes and payments that inflate Medicaid dollars could erase far more funding than Congress planned — about $340B in expected losses by 2034, rising to roughly $681B in additional losses through 2035 — while the rules would yield $756B in federal savings and $265B in state savings. Hospitals warn the impact could force reduced services, layoffs, or closures, though CMS says the reforms curb misused dollars and will be finalized after comments, with a phased rollout starting in 2028.