Medical bills are spread out on the kitchen table of a cancer patient in Salem, Va. (Photo by Don Petersen/The Associated Press)

This article first appeared on KFF Health News.

As Congress debates whether to extend the temporary federal subsidies that have helped millions of Americans buy health coverage, a crucial underlying reality is sometimes overlooked: Those subsidies are merely a band-aid covering the often unaffordable cost of health care.

California, Massachusetts, Connecticut and five other states have set caps on health care spending in a bid to rein in the intense financial pressure felt by many families, individuals and employers who every year face increases in premiums, deductibles and other health-related expenses.

Hospitals and other health care providers are citing Republicans’ One Big Beautiful Bill Act, signed by President Donald Trump in July, as one more reason to challenge those limits.

The law is expected to reduce federal Medicaid spending by more than $900 billion over a decade, which mathematically should help the overall health care system meet the caps. But the law is also expected to increase the number of uninsured Americans, mostly Medicaid beneficiaries, by an estimated 10 million people. Health care analysts predict hospitals and other providers will raise prices to cover the double whammy of lost Medicaid revenue and the cost of caring for an influx of newly uninsured patients.

Whether regulators in some states will allow providers to justify higher prices and exceed the spending caps is unclear. Only California and Oregon can penalize providers financially if they fail to meet targets.

“Are we going to say, ‘That’s OK’? Or are we going to say, ‘Well, you exceeded the target. We’re still going to penalize you for that’?” said Richard Pan, a former state lawmaker and a member of the California Office of Health Care Affordability’s board. “That has not yet been decided.”

The California Hospital Association, the industry’s main state lobbying group, filed a lawsuit in October asking a state court to strike down the spending caps, which it argued fail to account for all the cost pressures hospitals face. Those pressures, it said, include an aging, sicker population; the rising cost of labor; expensive advances in medical technology; large capital outlays on required seismic retrofitting; and changes in federal policy, including the One Big Beautiful Bill Act. The hospital group’s lawsuit also asserted that the state affordability office, by hastily imposing ill-considered cost-cutting targets, was undermining its other key mission of improving health care access, quality and equity.

California’s affordability office last year set a five-year target to cap statewide spending growth, starting at 3.5% in 2025 and declining to 3% by 2029. The annual caps apply to a wide range of health care entities, including hospitals, medical groups, insurers and other payers.

Earlier this year, it imposed much lower spending growth caps — starting at 1.8% in 2026 and declining to 1.6% by 2029 — for seven “high-cost” hospitals.

“The spending caps set by politically appointed bureaucrats could force cuts that result in many Californians traveling farther for care, facing longer emergency room wait times, experiencing more overcrowding and losing access to critical services,” Carmela Coyle, the hospital association’s president and CEO, said in an October press release.

The California attorney general’s office, which will represent the affordability agency, has not yet filed a response to the hospital group’s complaint and did not respond to a request for comment.

Hospitals’ pushback

California is not the only state taking a close look at hospital prices, which are widely considered a primary driver of health care costs.

“States, armed with information that points to payments to hospitals as a driver of what is way beyond affordable commercial premiums, have begun to take increasingly targeted actions focused on commercial hospital prices,” said Michael Bailit, founder of the Needham, Massachusetts-based consultancy Bailit Health, which has advised multiple states, including California, on ways to tame health care spending. “It is not surprising that the hospital industry is going to oppose such state actions.”

In its lawsuit, the California Hospital Association said the affordability office’s own report showed that pharmaceutical and insurance companies are largely responsible for high costs.

Hospitals in some states with cost growth limits, including Connecticut and Massachusetts, have expressed objections similar to the ones raised in the California lawsuit. They could follow their counterparts in California if their lawsuit succeeds, said Peter Lee, who led California’s Affordable Care Act marketplace, Covered California, for over a decade and is now a senior scholar at Stanford Medicine’s Clinical Excellence Research Center.

Lee said the work of California’s affordability office and similar agencies in other states is just about the only systemwide effort being made to cut health care costs. They are basically saying, “‘Look, health care is taking money away from education, it is taking money away from the environment, it is taking money away from everything in the public sector, and in the private sector it is taking money away from wages,’” he said. “‘We don’t know how you, the health system, are going to do it, but it is your job not just to provide quality but to lower costs. Here’s the target.’”

To be sure, achieving the cost savings that California and those other states are seeking is no easy lift. It will ultimately require persuading large, financially powerful players that compete fiercely for health care dollars to adopt a different mindset and begin cooperating to reduce costs instead. And that, in many cases, will mean lower revenue.

But the status quo, as many people know all too well, means continued financial pain for millions.

In early 2020, Estevan Rodriguez, a bartender at California’s Monterey Beach Hotel, had surgery for a staph infection in his leg. The bill came to nearly $168,000. His insurance paid most of it, but he still owed $5,665, which took him two years to pay, more than $200 every month. “It may not be a lot to some people, but it was a lot to me,” Rodriguez said.

He said he dropped his Hulu subscription, switched to a lower-cost cellphone, and got cheaper car insurance. He started going to food banks rather than the grocery store, he said, and had a lot less time with his kids, because he was constantly working to pay off the hospital bill.

Community Hospital of the Monterey Peninsula, where Rodriguez had his surgery, is one of the seven hospitals identified by California’s affordability office as high-cost. A study by the office attributed high hospital prices in Monterey County to a lack of market competition “rather than higher operating costs or superior quality of care.”

The Monterey hospital referred a request for comment about its “high-cost” designation to the California Hospital Association. CHA spokesperson Jan Emerson-Shea declined to comment beyond the language of the lawsuit and Coyle’s press release statement.

Reduced competition

Health care analysts worry the One Big Beautiful Bill Act will reduce market competition even further by stressing already weak hospitals, leading some to shut services, merge with larger health systems, or close. One study estimates 338 rural hospitals are at risk of closing nationwide.

Less competition, in addition to fewer Medicaid dollars and an increase in uninsured patients, will only strengthen the incentive of health systems with the requisite market clout to raise their commercial prices, increasing premiums for employers and individuals.

“We think commercial prices will continue to increase as health care providers, and hospitals in particular, will seek to preserve or increase their revenue,” said Rachel Block, a program officer at the Milbank Memorial Fund, a foundation that focuses on health equity.

That in turn could pose a challenge to state affordability regulators tasked with overseeing compliance with growth targets for health care spending.

California’s affordability office is required to consider mitigating factors, including changes in federal and state laws. But some of its board members have expressed skepticism about letting hospitals offset Medicaid losses with higher commercial prices.

“There’s a lot of talk about using HR 1 and other federal policies as an excuse to raise prices on commercial payers,” Ian Lewis, an affordability office board member and policy director for UNITE HERE Local 2, a hospitality workers union in the Bay Area, said at the agency’s July board meeting, referring to the One Big Beautiful Bill. “There’s no more blood to be squeezed from this stone.”

KFF Health News is a national newsroom that produces in-depth journalism about health issues and is one of the core operating programs at KFF — an independent source of health policy research, polling and journalism. Learn more about KFF.

A vacant hallway at Vaughan Regional Medical Center in Selma, Alabama, on Tuesday, Sep. 3, 2024 in Selma, Alabama. (Will McLelland for Alabama Reflector)

WASHINGTON — President Donald Trump’s administration unveiled Monday hundreds of millions of dollars each state will receive this fiscal year as part of a massive $50 billion rural health fund baked into Republicans’ “big, beautiful” law. 

The five-year Rural Health Transformation Program — authorized under GOP lawmakers’ mega tax and spending cut package Trump signed into law in July — is designed to offset the budget impacts on rural areas due to sweeping Medicaid cuts.  

Half of the $50 billion will be distributed equally among each state between fiscal years 2026 and 2030, according to the Centers for Medicare and Medicaid Services.

The agency under the U.S. Department of Health and Human Services said the remaining $25 billion, doled out over the same time period, is being allocated to states based on several factors, such as steps states are taking to improve access to care in rural communities. 

Texas will get the highest first-year award at $281.3 million, followed by Alaska at $272.2 million, California at $233.6 million, Montana at $233.5 million and Oklahoma, at $223.5 million. 

New Jersey is receiving the lowest first-year award, at $147.2 million. 

“Thanks to Congress establishing this investment and President Trump for his leadership, states are stepping forward with bold, creative plans to expand rural access, strengthen their workforces, modernize care, and support the communities that keep our nation running,” CMS Administrator Dr. Mehmet Oz said in a statement alongside the announcement. 

Oz added that “CMS is proud to partner with every state to turn their ideas into lasting improvements for rural families.” 

Meanwhile, the nonpartisan health research organization KFF found that the program would only offset a little more than one-third of the package’s estimated $137 billion cut to federal Medicaid spending in rural areas over the next decade.

Ashley Murray contributed to this report. 

Senate President Mary Felzkowski (R-Tomahawk) said she hopes her "fellow assemblymen continue to put pressure on their leadership" to pass postpartum Medicaid expansion. Felzkowski spoke at a Republican press conference about postpartum Medicaid expansion in April. (Photo by Baylor Spears/Wisconsin Examiner)

Senate President Mary Felzkowski (R-Tomahawk) said in a year-end interview with the Wisconsin Examiner that the year has been one of “very steady growth” and top priorities for her in the remaining legislative session include passing legislation to help bring down the cost of health care, advancing medical cannabis legislation and passing additional tax cuts. 

Felzkowski pointed to the state budget in which lawmakers and Gov. Tony Evers increased funding for roads and transportation costs, cut taxes including for retirees, increased special education funding and dedicated funding to mental health initiatives. She was one of four Senate Republicans to vote against the state budget, a vote she said she took because of her opposition to increasing the state’s hospital assessment without health care reforms. 

A slimmed down, 18-member Republican majority in the Senate this session and several GOP senators who took a stand against a compromise budget deal gave Senate Democrats an opening to come to the budget negotiating table, and to win compromises on school funding as well as stop cuts to the University of Wisconsin system.

Felzkowski said the slimmer margins this year have been normal. 

“If you look back for the last 30 years, when the Republicans are in control, we are normally at 18-15 margin in the Senate,” Felzkowski said. “When we were up to like 22, that was kind of a gift, so we are a very strong Republican majority right now.”

Felzskowski said working on health care affordability will be her top priority when lawmakers return in January. This includes working on health care price transparency and working to advance her legislation that would make changes to the regulation of pharmacy benefit managers — third-party companies that manage prescription drug benefits between health plans, employers and government programs.

Health care and prescription drugs

Felzkowski’s bill would allow patients to use any licensed pharmacy in the state without facing penalties and require benefit managers to pay pharmacy claims within 30 days. 

“Our neighbors to the south in Illinois just passed their version of PBM reform,” Felzkowski said, adding that her bill has passed out of committee and lawmakers are now discussing whether it will receive a full Senate vote. 

Felzkowski’s health care price transparency legislation would require hospitals to make publicly available to consumers the standard costs of “shoppable services,” which would be defined as those that can be scheduled in advance such as x-rays, MRIs and knee replacements. 

“What is one thing that you buy that you have no idea what it’s going to cost? It’s health care. That’s absolutely ridiculous,” Felzkowski said. “Other states have passed it. They’re starting to see the fruition of it and it does work. There’s a reason we have the fifth highest health care costs. It’s because our Legislature has not done anything to help bring those costs down and it’s time that we actually start doing that.” 

Felzkowski, who has been a longtime advocate for legalizing medical cannabis, said the Senate is “closer than ever” to having a vote on the floor on a proposal to do so, but she believes the chances of the Assembly advancing legislation remain “slim.”

Felzskowski said she hopes legislation to extend Medicaid coverage for postpartum women from 60 days after giving birth to one year isn’t dead this session. Wisconsin is one of two states in the U.S. that haven’t accepted the federal extension.

“I hope that my fellow assemblymen continue to put pressure on their leadership… Deep red states, blue states as well as purple states across the nation have postpartum care for 12 months and they’ve done it because it’s the return on investments for taxpayers as well as being the right thing to do,” Felzskowski said. “We see baby thrive, we see mom thrive, and it actually lowers the cost down the road.”

Fate of WisconsinEye

Felzkowski said Senate Majority Leader Devin LeMahieu and Assembly Speaker Robin Vos are having discussions about solutions to the shutdown of WisconsinEye, the nonprofit service that provides video coverage of legislative hearings, floor sessions and Wisconsin state government business. WisconsinEye halted its livestream and pulled down its video archive last week due to a lack of funding.

“Even if we do something temporary to get us through a session… just get through until April and then do a really deep dive on what should be the next step,” Felzkowski said, adding that that includes looking at how other states cover their state government.

“The transparency is important,” she said, adding they want to ensure people still have access to government proceedings and a record is still being kept of it all.

Felzkowski said she hopes Republicans can get one more tax cut done before the end of the legislative session next year. 

New tax cuts in the works

A few of the ideas legislators are considering include eliminating taxes on tips and overtime. 

“Anytime we can return money to our citizens is a good thing,” Felzkowski said, adding that state Republicans would like to align Wisconsin tax cuts with federal policy. The federal megabill approved in July included a tax deduction on tips and overtime that will be available from 2025 through 2028.

This December, Wisconsin residents are experiencing the highest property tax hikes since 2018, according to a recent Wisconsin Policy Forum report. The report explained that state budget decisions including Evers’ veto that allows school districts an annual $325 per pupil increase for the next 400 years as well as lawmakers’ decision to not provide any increase to state general aid this year have led to the hikes. 

Asked whether lawmakers will look to solutions for lowering property taxes, Felzkowski said it would take a new governor. 

“We have given [Evers] numerous chances to reverse that 400-year veto and he keeps vetoing the bill, so it’s on the governor’s plate right now,” Felzkowski said. “Until we get a different governor in the East Wing and we can start seriously addressing education and all the things that are wrong with it, I don’t know what to say.” 

Felzkowski said that even with the state budget surplus there wasn’t enough state money for the general aid increase.

“There were a lot of mouths to feed on that budget,” Felzkowski said. “With increasing revenues all over, there was not enough money out there to backfill that $325… We would have had to have raised taxes dramatically to do that. The dollars didn’t exist.”

Felzkowski said on education that she hopes Wisconsin will opt into the new federal education tax credit program. The program would provide a dollar-to-dollar tax credit of up to $1,700 to people who donate to a qualifying “scholarship granting program” to support taxpayer-financed private-school vouchers. Evers would need to opt the state into the program by Jan. 1, 2027, but so far has said he won’t. 

Confident GOP will hold Senate in 2026 

Wisconsin Republicans have held control of the state Assembly and Senate since 2010, and next year will test the strength of that majority when the state’s 17 odd-numbered Senate seats will be up for election for the first time under new legislative maps adopted in 2024. 

Last year when the maps were in place for the 16 even-numbered seats, Democrats were able to flip four seats. In 2026, Republicans will need to make sure Democrats cannot flip two additional Senate seats to hold control of the body.

Felzkowski expressed confidence that they will do so. 

“We will come back with a strong Republican majority. We have better policies, we have better ideas and we run great candidates,” Felzkowski said.

There will be several key, competitive districts in 2026 including Senate District 5, which is currently held by Sen. Rob Hutton (R-Brookfield), Senate District 17, which is currently held by Sen. Howard Marklein (R-Spring Green) and Senate District 31, currently represented by incumbent Sen. Jeff Smith (D-Brunswick) who will face a challenge from Sen. Jesse James (R-Thorp). 

“We’re going to run on the same policies we’ve always run on: lower taxes, strong freedoms, strong economies, strong education and government getting out of your way so that you can live the American dream,” Felzkowski said. “The Democrats are going to run on an anti-Donald Trump policy, more government, more influence in your life. It’s all they’ve ever run for.”

Some Democrats have taken election results in 2025 as a sign that people are unhappy with the Trump administration and are ready to elect Democrats. 

Felzkowski said she didn’t think that 2025 election results in other states were going to be applicable in Wisconsin, though she said the new maps could be challenging for Republican candidates. 

“Wisconsin is kind of a unique state. We’re a very purple state,” Felzkowski said. “We knew those candidates in Virginia were going to win, I mean, it’s a blue state so I mean you can’t really base us on what happened in Virginia and New Jersey… We’re going to be running in Democratic-gerrymandered seats, so we’re going to have to work very hard, but we will win.”

Wisconsin also has an open race for governor on the ballot next year. U.S. Rep. Tom Tiffany, who is considered the frontrunner in the GOP primary, and Washington County Executive Josh Schoemann, are the current Republican hopefuls.

Felzkowski said she probably won’t endorse in the Republican primary for governor, but she is looking for a candidate who is a “conservative reformer who’s willing to take on the tough issues from health care, education, and corrections, lowering taxes” as well as someone who will do “a deep dive into our agencies,” adding that she hopes they’ll work to root out “waste, fraud and abuse.” 

The Democratic field of candidates is much larger including Lt. Gov. Sara Rodriguez, state Sen. Kelda Roys (D-Madison), state Rep. Francesca Hong (D-Madison), Milwaukee County Exec. David Crowley, former Wisconsin Economic Development Corporation CEO Missy Hughes, former Lt. Gov. Mandela Barnes, former Department of Administration Secretary Joel Brennan and former state Rep. Brett Hulsey.

GET THE MORNING HEADLINES.

SUBSCRIBE

A homeless man sits in his tent in Washington, D.C., this summer. New rules from the U.S. Department of Housing and Urban Development will sharply restrict how $3 billion in homelessness aid will be spent, allowing no more than 30% of federal grants to be used for permanent housing. (Photo by Anna Moneymaker/Getty Images)

As the housing shortage pushes more Americans into homelessness for the first time, the Trump administration wants to focus federal housing aid on mental health treatment and enforcement against street homelessness, rather than on finding people permanent homes as quickly as possible.

The administration’s new plan to tie federal housing aid to work requirements and drug treatment could be a boon to states such as Alabama, Florida and Wyoming that already are pursuing that strategy. But for many other states — and nonprofit providers across the country — the rules represent a sudden pivot from past expectations. In California, the new federal funding priorities face a direct conflict with state law.

Under new rules announced last month, the U.S. Department of Housing and Urban Development will place new restrictions on $3 billion in homelessness aid, allowing no more than 30% of federal grants to be used for permanent housing. That approach, known as Housing First, prioritizes getting people into safe, stable housing ahead of other treatment and enforcement, and had been a key focus for the federal government’s Continuum of Care Program for homelessness.

Now, HUD’s new rules — a shift to Treatment First policies — could result in a major reprioritization of who gets funding and for what purpose. Backlash from many nonprofits and homelessness service providers across the country has been swift, and 20 states and Washington, D.C., have filed suit to stop the rules, arguing they violate federal law. Several cities and counties across the country also have joined a lawsuit against the department.

While service providers point to success stories from permanent supportive housing, the Trump administration points to rising homelessness — and a perception of violent crime — as a reason to shift funding away from the long-standing approach.

But Martha Are, CEO of the Homeless Services Network of Central Florida, said the Trump administration is putting the onus on  nonprofits and service providers to fix a homelessness crisis that is propelled by a lack of housing that people can afford.

“If homelessness numbers go up, some assume the homeless-response system doesn’t work. But the real driver is the housing market, not the interventions,” Are said. “HUD is penalizing communities for following the rules they set in previous years. I’ve never seen them say, ‘You complied with our guidance, and now you lose points for it.’”

Easy transition for some states

An analysis of publicly available federal data by the National Alliance to End Homelessness found that 88% of federal Continuum of Care dollars flow to permanent supportive housing and rapid rehousing, the models with the strongest evidence of reducing chronic homelessness. The new HUD rules would force cuts large enough to cause roughly 170,000 people to lose that housing, according to the advocacy group’s projections.

But a handful of Continuum of Care programs already devote far less to permanent housing. According to the National Alliance to End Homelessness, that includes that includes certain county or state programs in Alabama, Arkansas, Florida, Georgia, Tennessee, West Virginia and Wyoming.

These programs operate closer to HUD’s new funding requirements and are unlikely to face major disruption. Some even may become more competitive for federal funding, especially in states where policymakers have already adopted enforcement-heavy approaches to homelessness.

Such states — including Florida, Georgia, Missouri, Tennessee and Texas — may be better positioned under HUD’s new grant-funding criteria, which prioritize jurisdictions that criminalize public camping, expand law enforcement involvement or restrict low-barrier shelters, which may have more flexible policies than traditional shelters.

Since the U.S. Supreme Court’s City of Grants Pass v. Johnson ruling in June 2024 allowing localities to ban outdoor camping even if there is no homeless shelter space available, roughly 150 cities in 32 states have passed or strengthened such ordinances.

The annual point-in-time count of people sleeping outside reported that homelessness reached an all-time high in 2024, the most recent data available from HUD. The count, taken during the last 10 days of January 2024, found that 771,480 people were experiencing homelessness, an 18% increase over the previous year and the largest one-year jump in the history of the count.

HUD told Stateline the administration is shifting its approach to emphasize “long-term self-sufficiency and recovery” rather than the number of housing units funded or filled.

The agency rejected advocates’ claims that the new rules will increase homelessness, arguing instead that “failed” Housing First policies have contributed to rising numbers. HUD said it hopes communities will convert many permanent supportive housing programs into transitional housing with stronger requirements around addiction and mental-health services.

Skepticism about Housing First

The impact of these cuts won’t be evenly distributed.

Some areas with the deepest investments in the Housing First approach — including Cleveland, Ohio; Los Angeles; and New York City — stand to lose thousands of units that currently serve older adults, those leaving domestic violence situations, people with disabilities, veterans and families.

Those in favor of HUD’s funding shift argue that long-standing as it may be, Housing First has failed to reduce homelessness.

HUD’s annual counts show national homelessness rising for most of the past decade, and the nonpartisan Congressional Research Service notes that while Housing First stabilizes individuals, it has not reduced the number of people experiencing homelessness.

A 2021 Harvard University study found that while most people in permanent supportive housing remained housed in the first year, retention dropped sharply over time — with only about 12% still housed after 10 years.

Conservative think tanks such as the Cicero Institute, American Enterprise Institute and the Manhattan Institute suggest that Housing First undervalues mental health and substance use treatment. They point to Oregon’s homelessness struggles after drug decriminalization as evidence that voluntary services alone cannot stabilize the most vulnerable residents.

They further argue that permanent housing grants crowd out shelter, detox and transitional programs, and that many nonprofits defending the model are financially invested in maintaining the status quo.

At a moment when tight housing markets are pushing record numbers of people into first-time homelessness, local providers, who stand to lose grants, warn that HUD’s policy reversal will function more like a mass eviction than a funding shift — sending tens of thousands of people back into shelters, onto waiting lists, or directly onto the streets.

Losing trust in the system

In Orlando, Florida, many residents are experiencing homelessness for the first time. Shelters are full and a recent law in Florida allows police to arrest people for sleeping outdoors.

Are, of the Homeless Services Network of Central Florida, said the proposed HUD changes would eliminate more than 500 permanent housing subsidies that her organization offers in the Orlando area alone.

For providers, these subsidies cover the rent for units where people already live. If HUD defunds them, tenants would lose support, landlords would stop receiving payments and people would be evicted unless local governments backfill the funds, she said. And most local governments can’t afford to, she added.

Central Florida has built a system that uses data to focus on high-need individuals and keep them housed — in long-term rental units paired with voluntary support services — at a lower cost than mandated hospitalizations or treatment, Are said. HUD’s abrupt policy reversal would unravel years of progress and leave communities with “no place to put people.”

“Our permanent supportive housing costs about one-twentieth of what inpatient institutional programs cost in this region, and the outcomes are far better,” she said.

Nashville, Tennessee, had expected stable homelessness funding until HUD overhauled the rules “out of [the] blue” and at a time when it would be hard for providers to plan for sudden changes, said Wally Dietz, legal director for the Metropolitan Government of Nashville and Davidson County.

When Congress approved a two-year cycle for fiscal years 2024 and 2025, localities were told they wouldn’t have to reapply for money, he said. That changed this fall.

“Nashville was given 60 days, spanning Thanksgiving and Christmas, to rewrite and resubmit its entire homelessness funding application, which is something the city typically prepares for a full year,” Dietz said.

If the changes to Nashville’s funding go through, not only will people lose their housing, he said, but a 20-year infrastructure will crumble and the164 landlords who partnered with the city will lose faith once rent aid stops flowing.

“Once evicted, people will not reengage with the system, and trust will be impossible to rebuild,” Dietz said.

Nashville is among a handful of localities, including Boston, San Francisco and Tucson, Arizona, that filed a joint lawsuit Monday to block the rule changes, accusing HUD of bypassing Congress. The suit, whose plaintiffs also include the National Alliance to End Homelessness and the National Low Income Housing Coalition, was filed in U.S. District Court in Rhode Island.

“If the administration wants to overhaul homelessness policy, it has to go through Congress,” Dietz said. “That gives cities time to prepare, to testify, to budget. But we didn’t get that chance.”

Stateline reporter Robbie Sequeira can be reached at rsequeira@stateline.org.

A store displays a sign accepting Electronic Benefits Transfer, or EBT, cards for Supplemental Nutrition Assistance Program purchases for groceries on Oct. 30, 2025 in New York City. (Photo by Spencer Platt/Getty Images)

The U.S. Department of Agriculture will begin next week to block nutrition assistance funding for states led by Democrats that have not provided data on fraud in the program, Secretary Brooke Rollins told President Donald Trump at a Cabinet meeting Tuesday.

USDA sought data from states earlier this year related to their administration of Supplemental Nutrition Assistance Program, or SNAP, benefits, Rollins said Tuesday. She added the data was needed to address fraud that she called “rampant” in the program that helps 42 million people afford groceries.

Most states complied with the request, but 21, mostly run by Democrats, refused, she said. A USDA spokesperson later implied the department was missing data from 22 states.

“As of next week, we have begun and will begin to stop moving federal funds into those states until they comply, and they tell us and allow us to partner with them to root out this fraud and to protect the American taxpayer,” Rollins said.

A USDA spokesperson in an email listed 28 states, plus one territory, from which they said the department has received data.

That would leave the following 22 states, all led by Democratic governors, that have not provided data: Arizona, California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Kansas, Kentucky, Maine, Maryland, Massachusetts, Michigan, Minnesota, New Jersey, New Mexico, New York, Oregon, Pennsylvania, Rhode Island, Washington and Wisconsin. 

The spokesperson provided some additional details of the initiative, including that the department was targeting administrative funds, and that the next step would be a formal warning.

Blue states sought to protect bad actors, including criminals and immigrants in the country without legal status, “over the American taxpayer,” the statement said.

“We have sent Democrat States yet another request for data, and if they fail to comply, they will be provided with formal warning that USDA will pull their administrative funds,” the spokesperson said.

Court records show the department sent the states a new request for data on Nov. 28, and asked for a response within seven days, which would be Friday. 

The letter was reproduced as part of a suit the 22 states have brought against the administration over the request for SNAP recipients’ data.

Leading Dem calls threat illegal

It’s unclear what authority Rollins would have to block funding, which Congress has appropriated.

The federal government pays for all benefits for SNAP, which was formerly known as food stamps. It splits the administrative costs with states.

The USDA spokesperson did not answer a direct question about the legal authority for withholding funds.

Democrats on the U.S. House Agriculture Committee said any effort to block SNAP funding would be illegal.

“Yet again, Trump and Rollins are illegally threatening to withhold federal dollars,” a social media post from an official account of committee Democrats read. “SNAP has one of the lowest fraud rates of any government program, but Trump continues to weaponize hunger.”

The committee’s lead Democrat, Angie Craig of Minnesota, issued her own statement that also accused the administration of “weaponizing hunger” and said Rollins “continues to spew propaganda.”

“Her disregard for the law and willingness to lie through her teeth comes from the very top – the Trump administration is as corrupt as it is lawless, and I will not sit silently as she carries out the president’s campaign against Americans struggling to afford food in part because of this president’s tariffs and disastrous economic policies.”  

SNAP fraud

The data USDA has sought from states includes verification of SNAP recipients’ eligibility, along with a host of personal information such as Social Security numbers.

An early USDA review of data provided by the 28 states and Guam “indicates an estimated average of $24 million dollars per day of federal funds is lost to fraud and errors undetected by States in their administration of SNAP,” the department said in the Nov. 28 letter.

Preventing those losses could save up to $9 billion per year, the letter added.

But the types of fraud cited in some of the public statements from Rollins and the department are rare, existing data show.

A 2023 USDA report showed about 26,000 applications, roughly 0.1% of the households enrolled in SNAP, were referred for an administrative or criminal review.

People in the country illegally have never been authorized to receive SNAP benefits.

“The long-standing data sources indicate that intentional fraud by participants is rare,” Katie Bergh, a senior food assistance policy analyst for the left-leaning think tank Center for Budget and Policy Priorities, said in a November interview.

Trump administration target

SNAP has been a consistent target for cuts during Trump’s second presidency.

The issue was a focal point during the six-week government shutdown, during which the administration reversed itself often but generally resisted calls — from states, advocates, lawmakers and federal judges — to fund food assistance.

Shortly after the government reopened, Rollins in television interviews said she would force all recipients to reapply for benefits, a proposal seen as logistically challenging by program experts.

And the Republican taxes and spending law passed by Congress and signed by Trump earlier this year included new work requirements and other restrictions on SNAP eligibility that advocates say will lead to major drops in benefits. 

The law will also make states pay for some share of benefits and increase the share of administrative costs that states are responsible for, potentially leading some states to cut benefits.

Boxes of the diabetes drug Ozempic rest on a pharmacy counter in Los Angeles. Drugs like Ozempic have grown in popularity to treat obesity, prompting more than a dozen states to pay for them. But with major budget pressures, several state Medicaid agencies are either stopping coverage altogether or restricting who can get access to the therapy. (Photo illustration by Mario Tama/Getty Images)

Some states are rethinking their coverage of GLP-1 drugs for weight loss as budgets tighten and Medicaid programs brace for the cuts included in President Donald Trump’s broad tax and spending law.

As of Oct. 1, 16 state Medicaid programs covered GLP-1s for obesity treatment, up from 13 last year, according to a survey of Medicaid directors by KFF, a health policy research group. But some states have announced they will discontinue coverage or restrict who can qualify for it.

Many doctors and patient advocates say the drugs will save money in the long run by reducing obesity-related diseases such as heart disease and diabetes. Many states, however, have concluded they just can’t afford them.

North Carolina Medicaid ended coverage of GLP-1s for obesity last month, citing shortfalls in state funding. California, New Hampshire and South Carolina have said they will end coverage on Jan. 1. Starting next year, Michigan Medicaid will limit coverage to people who are “morbidly obese.” Pennsylvania, Rhode Island and Wisconsin also are considering new restrictions.

In last year’s KFF survey, about half the states said they were interested in covering GLP-1s for weight loss, according to Elizabeth Williams, a senior policy manager at KFF who focuses on Medicaid. This year, most states are moving in the opposite direction.

“This likely reflects recent state budget challenges and the significant, significant costs associated with coverage,” Williams said. “After a number of years of robust revenue growth right after the pandemic, states are starting to see slowing revenues, increasing spending demands and a lot of fiscal uncertainty due in part to recent federal actions.”

In April, the Trump administration scrapped a Biden-era proposal that would have required state Medicaid programs to pay for some GLP-1s for obesity treatment. Earlier this month, Trump announced that his administration had reached agreements with the manufacturers of Wegovy and Zepbound to reduce the prices of the drugs for Medicaid, Medicare and consumers buying the drugs directly, But it’s unclear whether the deals will reduce costs for states.

Health plans for state workers also are reassessing their coverage of the drugs for obesity. North Carolina, for example, ended GLP-1 obesity coverage for state workers last year, and West Virginia canceled a 1,000-person pilot program.

GLP-1 medications, which balance blood sugar levels, have long been prescribed to patients with Type 2 diabetes and cardiovascular conditions. All state Medicaid programs, which are funded jointly by the states and the federal government, cover GLP-1s for those uses.

But the drugs also curb hunger signals and can help people lose significant amounts of weight. Medications such as Ozempic, Wegovy and Zepbound have become wildly popular for that purpose.

Between 2019 and 2023, the number of outpatient Medicaid prescriptions for select GLP-1s to treat diabetes and obesity grew from 755,300 to 3.8 million, according to KFF. During the same period, Medicaid spending on those drugs increased from $597.3 million to $3.9 billion.

A study published last year in The BMJ, the journal of the British Medical Association, found that the number of patients without diabetes who started GLP-1 treatment in the United States increased from roughly 21,000 in 2019 to 174,000 in 2023, or more than 700%.

More than 2 in 5 U.S. adults have obesity, according to the federal Centers for Disease Control and Prevention. The CDC defines obesity as having a body mass index — a calculated measure of body weight relative to height — of 30 or higher. Obesity costs the U.S. health care system almost $173 billion per year, according to the agency.

Recently, the manufacturers of some GLP-1s have lowered their prices, selling them directly to consumers for $500 or less per month. But many patients cannot afford to pay that much out of pocket.

States in a tough financial position

In North Carolina, Dr. Jennifer McCauley, a weight management physician at UNC Health, said Medicaid coverage of GLP-1s was “incredibly helpful for our patients.”

“Now they’ve stopped coverage, so those people are now going back, regaining some of the weight, because they’re unable to obtain these medications, and also are suffering the health consequences of obesity,” McCauley told Stateline.

Some critics of expansive GLP-1 coverage say it isn’t cost effective, because many patients gain back the weight they lost when they stop treatment. But McCauley said the “downstream effects of obesity are even higher.”

“There are definitely vulnerable populations that probably would not be able to obtain weight loss without these medications.”

James Werner, a spokesperson at the North Carolina Department of Health and Human Services, blamed the coverage change on the state legislature’s failure to budget enough money for Medicaid.

In an email to Stateline, Werner said coverage of GLP1s for weight loss “would be reconsidered if Medicaid is fully funded.”

Some states are trying to maintain at least some coverage of the expensive drugs by tightening the eligibility requirements for a prescription, according to Colleen Becker, a project manager at the National Conference of State Legislatures, a policy research group.

“States are really looking at how to balance access and provide that access to patients, but they’re stewards of their budgets, and they need to be good stewards of it,” Becker said.

Michigan and Pennsylvania are among the states considering such options. Meanwhile, Connecticut has decided to maintain coverage of weight-loss drugs for state employees, but to require beneficiaries to try online weight-loss counseling before they can get a prescription.

Some future possibilities

One state, North Dakota, has taken a different approach to GLP-1 coverage after legislation that would have required the state’s Medicaid program to cover the drug failed. Instead, North Dakota this year became the first state to mandate that insurers on the state’s Affordable Care Act marketplace cover the drugs for weight loss.

North Dakota Deputy Insurance Commissioner John Arnold said the insurance department calculated that the mandate wouldn’t cause insurance premiums to rise significantly.

“It’s not that anybody can walk into the doctor’s office and say, ‘Hey, I want to have this covered,’” Arnold said. “It is really for those who have a medical need for the drugs, then it would be covered.”

The insurance department had to ask the legislature for permission to make the change, according to North Dakota Republican House Speaker Robin Weisz. He said insurance carriers were concerned that it was going to be “open season for everybody who could lose 20 or 30 pounds.”

He said it will take time to see whether the policy raises insurance premiums.

“If the carriers can come in a couple years and say, ‘Wow, here’s what we’ve spent on these … we’ll take a hard look at it,” Weisz said. “But, it’s way too early to tell at this point.”

Arnold says other states may have the flexibility to consider mandating ACA insurers to cover the drugs.

“Our biggest concern was reducing those comorbidities and the long-term impact that that has on the cost of insurance in general, because more comorbidities means more claims,” Arnold said, referring to diseases and conditions associated with obesity.

Stateline reporter Shalina Chatlani can be reached at schatlani@stateline.org.

Children are pictured at an Autism Speaks Light it Up Blue Autism Awareness Celebration at Chicago Children's Museum in April 2017. State Medicaid agencies are struggling to pay for applied behavior analysis, an intensive therapy for children with autism. (Photo by Daniel Boczarski/Getty Images for Autism Speaks)

State Medicaid agencies are struggling to pay for an intensive therapy for children with autism — and looming federal Medicaid cuts are likely to make the problem worse.

Parents of children and young adults who receive applied behavior analysis, or ABA, worry states’ cost-saving measures will make it harder for them to get vital services. About 5% of children ages 3 to 17 on public insurance have autism spectrum disorder, compared with 2% who have private insurance, according to a CDC survey.

Many families and autism therapists say ABA can help improve communication and social skills, sharpen memory and focus, and replace challenging behaviors with positive ones. ABA therapy can range from 10 to 40 hours per week in different settings, including home and school. That makes it expensive.

In 2014, the federal Centers for Medicare & Medicaid Services mandated that all state Medicaid programs cover comprehensive autism services for children. It did not explicitly require coverage of ABA, but by 2022, every state Medicaid program covered ABA.

In addition, more kids are getting diagnosed with autism as screenings increase. As a result, state spending on the service has skyrocketed. In Indiana, for example, Medicaid spending on ABA therapy grew from $21 million in 2017 to $611 million in 2023. The sharp increase has prompted Indiana, and other states, to take steps to control costs.

Meanwhile, federal auditors have begun examining states’ coverage of ABA services to ferret out fraud and abuse.

Mariel Fernandez, vice president of government affairs at the Council of Autism Service Providers, a nonprofit trade association, acknowledged that states are facing difficult choices.

“For such a costly and intensive service, the states need to explore how to best reimburse this benefit so that it’s sustainable and promotes quality,” said Fernandez, who is also a board-certified behavioral analyst. “Is [the rate] going to bankrupt Medicaid? Is it going to ensure that people are actually receiving the service?”

The Medicaid changes included in the One Big Beautiful Bill Act that President Donald Trump signed in July will increase the pressure: The law includes more than $900 billion in federal spending cuts over the next decade. Medicaid is funded jointly by the federal government and the states.

Meanwhile, Health and Human Services Secretary Robert F. Kennedy Jr. has described autism as a rapidly growing “epidemic” in the U.S. and has made it a major focus of his tenure. Kennedy has promoted the debunked theory that there’s a link between childhood vaccines and autism.

Curbing costs

Several states this year have considered curbing ABA costs by capping therapy hours, tightening provider enrollment rules, reducing reimbursement rates or changing patient eligibility rules. A bill in New York, for example, would establish a 680-hour annual cap on ABA services.

But nowhere has the issue been more prominent than in Indiana, where Medicaid has covered ABA therapy since 2016.

Governor’s group recommends ABA usage cap, rate changes as Medicaid costs rise

Historically, Indiana Medicaid has reimbursed ABA providers for most services at a rate of 40%, regardless of what they charged.

That “created some very strange incentives for a small portion of the provider network,” said Jason McManus, president of Indiana Providers of Effective Autism Treatment (InPEAT), which represents smaller ABA providers in Indiana and larger providers that operate in Indiana and elsewhere. “You had folks who were charging exorbitant amounts for the service.”

Beginning in 2024, Indiana lowered its reimbursement rate to about $68 per hour — and received plenty of pushback.

“That did have an impact on the provider community,” McManus said. “You had a lot of folks, smaller shops, who ended up closing their doors or consolidating with other organizations. So that was disruptive.”

And that year, the HHS inspector general issued a report which found that Indiana’s Medicaid program made at least $56 million in “improper” payments to ABA therapy providers in 2019 and 2020.

The state’s rapidly rising ABA costs and the federal audit prompted Republican Gov. Mike Braun to issue an executive order earlier this year creating a working group to examine ways to cut costs without compromising quality.

The group crafted recommendations to correct the problems identified in the federal audit and put ABA coverage on a financially sustainable path. Without changes in the state’s reimbursement policies, the group concluded, Indiana’s Medicaid spending on ABA therapy would reach a projected $825 million by 2029.

This month, Braun unveiled the group’s recommendations, which include the creation of a new ABA office to increase oversight and lower reimbursement rates, which the state has not yet detailed.

ABA allows people with autism “to obtain the highest level of independence that’s possible for them,” said McManus, who served on the working group.

“But from a state perspective, I can see how, if you’re purely just looking at the cost, you would say, ‘Wow, this is a cost that has grown over time, and if absent all other contexts, this is something we need to pay attention to, because it’s unsustainable.’”

Nebraska rate cut

In Nebraska, state officials also have been looking for ways to control spiraling ABA costs: Last year, Nebraska Medicaid paid out more than $85 million for ABA therapy, a surge from $4.6 million in 2020.

In July, the state announced that it would cut its Medicaid reimbursement rates for ABA, including a 48% cut to reimbursement for direct therapy provided by a behavior technician. That brought the rate to $74.80 per hour, down from about $144 per hour. Rates for therapy by physicians or other board-certified professionals also were reduced by about 37%.

Many providers saw the cuts coming, as the state has had the highest hourly reimbursement rate in the nation.

“It would be fiscally irresponsible of the state to maintain that,” said Leila Allen, vice president of external affairs at Lighthouse Autism Center, which has ABA therapy centers in Nebraska as well as in Illinois, Indiana, Iowa, Michigan and North Carolina.

Sam Wallach, president of Attain, an ABA therapy provider that operates in Nebraska and a dozen other states and Washington, D.C., said the service is “life-changing for children and families.” He views the ABA reduction as a “correction” that will make it feasible for Nebraska Medicaid to continue to cover it.

“The previous rates were well above what most Medicaid programs pay nationally, and while that created short-term benefits, it wasn’t realistic or sustainable,” Wallach said.

But some providers are taking issue with the way Nebraska went about those cuts.

For example, the state provided only 30 days’ notice before making the change. “There were providers that within 30 days had to tell their staff, ‘We’re so sorry. We have to cut your salary by ‘x’ percent in 30 days,’” Allen said.

Nebraska also didn’t examine how much it costs to provide ABA in the state, she said. The new rate is closer to what neighboring states, such as Iowa, pay. But therapists are few and far between in sparsely populated Nebraska, and families there often have to travel long distances to reach ABA providers.

“There was no cost survey to determine what the cost should be,” said Allen. “They didn’t take into account that you do have to pay people a little bit more to be able to work as behavior analysts in Nebraska.”

Finding ABA therapists in Nebraska is particularly difficult for families with older kids. Angela Gleason, executive secretary on the board of autism advocacy organization Arc of Nebraska, has a 13-year-old son with autism. She said many companies only serve very young children, up to age 6.

“So for families like mine, it’s then hard to even find a company that will serve his age and will provide that kind of support,” she said. To be able to afford therapy, her son Teddy has Medicaid coverage as his secondary insurance. ABA therapy helps him with socializing and speaking with his speech delay.

“He needs a lot more help throughout his day than a normal 13-year-old without autism might need,” Gleason said.

North Carolina court case

In North Carolina, the cost of covering autism services, including ABA, will total an estimated $639 million in fiscal 2026, up 425% from 2022, according to the state’s Medicaid agency. About five autism providers made up roughly 41% of the state’s increase in spending in fiscal year 2023-2024, according to the state.

Effective on Oct. 1, North Carolina Medicaid cut reimbursement rates for all kinds of health care services, arguing that state legislators had not budgeted enough money to keep up with rising costs. The reductions, which ranged from 3% to 10%, included a 10% cut to the reimbursement rate for autism services, including ABA therapy.

But the families of 21 children immediately sued the state Department of Health and Human Services to halt the move, arguing that it was discriminatory because it targeted children with disabilities.

Earlier this month, the families won a preliminary injunction temporarily halting the rate cut.

But families across the state are on edge as children with autism often see multiple providers — psychologists and speech language pathologists, for example — whose rate cuts were not paused, according to Allen, of Lighthouse Autism Center.

David Laxton, director of communications for the Autism Society of North Carolina, which is also a provider, said many providers won’t be able to absorb the rate reductions and continue operating.

“At some point, the math is not going to math,” Laxton said.

“It’s very stressful for families, because right now, there’s not an end in sight,” Laxton said. “There’s agreement that this [service] is very important, but there’s not been action to bring an end to the cuts.”

Stateline reporter Nada Hassanein can be reached at nhassanein@stateline.org.

Reading Time: < 1 minute

The National Institutes of Health (NIH) awarded almost $5 billion less in research grants to U.S. institutions in the 2025 fiscal year than the year prior, a 13.6% reduction, according to an Association of American Medical Colleges report released in August. 

The NIH committed $30 billion for research from July 2024 through June 2025, down from the $34.7 billion it obligated from July 2023 to June 2024. More than $3.5 billion of that funding difference was specifically in medical research and development while another half-billion was lost in career training for scientists.

Wisconsin’s share dropped by $84.4 million, or about 14%.

Disruptions in NIH research support have caused most states to lose tens and even hundreds of millions of dollars. They have also halted multiple clinical trials and research projects, including studies on post-tuberculosis lung disease and reducing infectious diseases spread by water.

This fact brief is responsive to conversations such as this one.

Sources

• Association of American Medical Colleges: NIH Awards Billions of Dollars Less in Research Funds
• National Institutes of Health: Funding Categories
• Partners in Health: What Research Funding Cuts Mean for the Future of Health Care

Has the National Institutes of Health distributed $5 billion less in grants in 2025? is a post from Wisconsin Watch, a non-profit investigative news site covering Wisconsin since 2009. Please consider making a contribution to support our journalism.

Reading Time: < 1 minute

Americans who earn less than $18,000 are estimated to see a slight federal tax cut under President Donald Trump’s big bill, but the net effect of the bill is likely to lead to a loss in household resources.

The average federal tax change from current levels for the bottom 20% of American earners is a reduction of $150 by 2026 and a reduction of $160 by 2030, according to estimates from the nonpartisan Tax Policy Center. In contrast, the average income earner will receive a $2,860 cut while the top 1% of earners will see a $75,410 cut on average. 

Lower income earners already pay little in taxes. Reductions in Medicaid and SNAP benefits are likely to affect lower income earners disproportionately, resulting in a projected net decline of 2.9% in their household resources.

This fact brief is responsive to conversations such as this one.

Sources

• Tax Policy Center: T25-0231 – Reconciliation Bill, One Big Beautiful Bill Act (OBBBA), As Passed by the House and Senate, Distribution by ECI Percentile, 2026
• The Budget Lab at Yale: Tax Provisions in the Reconciliation Bill: Combined Distributional Impacts
• Penn Wharton Budget Model: President Trump-Signed Reconciliation Bill: Budget, Economic, and Distributional Effects
• The Budget Lab at Yale: Distributional Effects of Selected Provisions of the House and Senate Reconciliation Bills

Will the bottom 20% of American income earners pay more in taxes under Trump’s big bill? is a post from Wisconsin Watch, a non-profit investigative news site covering Wisconsin since 2009. Please consider making a contribution to support our journalism.