Texas hospitals will lose about $27 million per day from Medicaid funding starting Tuesday as the federal government withholds roughly $9.8 billion from Texas programs over the next year, centered on disputes over how local hospital taxes are calculated.

CHIRP, which bridges the gap between Medicaid rate payments and hospitals’ actual costs with federal matching from local hospital tax collections, is at risk; losing CHIRP could force hospitals to scale back services.

Even if a settlement is reached quickly, a multi‑month delay and a potential 90‑day backlog in claims could slow restoration of funding and patient services.

The dispute ties into broader debates over Medicaid expansion in Texas, with the state’s non‑expansion stance drawing ongoing scrutiny and potential federal funding changes under related legislation affecting all non‑expansion states.

CMS renewal delays stem from questions about how local jurisdictions calculate hospital taxes, including assurances that funds won’t cover costs for non‑citizens; Texas HHSC and the governor’s office had not publicly commented on resolution prospects by publication.

Leaders warn that the funding cut could force reductions in services, staffing, and pediatric/behavioral health care, hitting safety‑net providers and children’s hospitals particularly hard.

Regional impact appears severe, with Houston’s Harris Health System potentially losing at least $258 million and the wider region facing up to $1.4 billion next year, threatening maintenance of safety‑net services.

Governor Abbott criticized the federal stance as an economic weapon, arguing Texas’s hospital tax structure complies with federal law, while warning the state could face up to $12 billion in losses in 2027 if the hold continues; officials from CMS, HHSC, and the governor’s office had not commented at press time.

Abbott described the withholding as an economic weapon, emphasizing the potential long‑term impact and reiterating that the dispute centers on how hospital taxes are calculated under federal guidance.