Deep Medicaid Cuts Come for Parkland

In September, moments before the county approved its annual budget, the chief executive of Parkland Health informed commissioners that the system anticipated losing $130 million in federal funding next year for a single program.

That reduction is a wake-up call for hospitals, especially for those such as Dallas County’s safety net system that treat mostly low-income and uninsured patients. There will be more changes coming. President Donald Trump’s tax and spending law, which he signed in July, includes deep cuts to Medicaid and doesn’t extend pandemic-era subsidies for health plans on the Affordable Care Act marketplace. Parkland and other systems are preparing to enter the unknown.

“We’re going to have some pressures in the out years,” said Dr. Fred Cerise, Parkland’s CEO, referring to when the greatest funding reductions are expected to begin.

Trump’s budget reconciliation package, known as the One Big Beautiful Bill Act, cuts Medicaid by about $1 trillion over the next decade while making it more difficult to enroll in Affordable Care Act insurance plans. The reduction is the steepest since the program’s inception for low-income and disabled Americans 60 years ago. Medicaid finances around 41 percent of all births in the U.S. and covers nearly half of all children through the Children’s Health Insurance Program, or CHIP, including 3.8 million in Texas.

Senate Democrats, citing these sweeping alterations to the nation’s healthcare system, blocked a spending bill that needed to be passed before midnight Wednesday in order to keep the government funded. Top Democratic leaders demanded an extension of the marketplace subsidies and a reversal of Medicaid cuts. The impasse spurred the nation’s first government shutdown since 2019.

The greatest impact of the spending bill to Texas is projected to be from the expiration of subsidies that rolled out in 2021 as part of a COVID-19 federal relief plan. These “enhanced premium tax credits” lowered the cost of Affordable Care Act marketplace plans, driving record enrollment in Texas. If Congress chooses not to extend those credits, prices for plans will skyrocket, and health policy analysts fear it will lead to millions losing their insurance. Around 4.2 million people in America are projected to become uninsured, including 920,000 in Texas, according to KFF, a nonpartisan health research group.

The collective impact of these changes on the nation’s healthcare system is likely to be grim. Around 14 million people in the U.S. could lose health insurance by 2034, according to the Congressional Budget Office. Texas counts about 5 million uninsured residents, which makes it the state with the highest uninsured rate in the nation. About 1.4 million more could lose their health insurance after these federal policy changes, which includes the 920,000 from the expiration of the subsidies. 

About 46.5 percent of Texas counties are considered maternity care deserts—meaning there is little to no access to medical services for women during pregnancy, childbirth, and postpartum, according to the maternal health nonprofit March of Dimes. That compares with 32.6 percent nationwide.  

“There are some real storm clouds on the horizon,”  says Steve Love, president and CEO of the DFW Hospital Council, which represents 90 member hospitals in North Texas. “It’s going to impact all hospitals. If you’re a public hospital, if you’re a children’s hospital, if you’re a general acute care hospital, if you’re a part of a larger system, everyone is gonna feel the impact.”

The Affordable Care Act passed in 2010, and a subsequent Supreme Court ruling gave states the power to choose whether to expand Medicaid to people who made too much to qualify. Texas is among the 10 states that never expanded the program for people earning above the federal poverty level, creating an ever-expanding doughnut hole of uninsured Texans who earn above the Medicaid limit but too little to receive a subsidy buying insurance through the Affordable Care Act marketplace. After the enhanced premium tax credits were created, enrollment numbers tripled from 1.3 million Texans signed up in 2021 to nearly 4 million in 2025.

The state is still navigating fallout from the pandemic, Love says. The public health emergency strained Texas hospitals and forced closures in rural areas. Those communities had to decide whether to shutter units or pay travel nurses exorbitant rates. The state is still contending with a shortage of specialists. The cuts, Love says, will affect every Texan—even those not enrolled in Medicaid—as providers struggle to keep their doors open and patients from outside large metro areas drive farther for care at urban hospitals. 

As the uninsured population grows, fewer people will seek preventive care, Love says. Instead, people are more likely to wait until they’re sicker and need emergency treatment. If they’re uninsured, the cost of emergency care is shouldered by the hospital. Higher shares of those unpaid bills constrict hospital budgets and could impact local economies.

A 2024 study by Love’s group showed North Texas hospitals infused $47 billion into the economy. They provided about $6.9 billion in care for which they were not compensated. Hospitals address community health needs in other ways, such as addressing food insecurity or housing issues that could lead to asthma. These services could now be scaled back.

The bill’s impact could take time to appear; some Medicaid cuts don’t begin until 2027. Parkland is being cautious with its $3.1 billion operating budget. For the first time in six years, the system won’t lower its tax rate, which was approved at 21.2 cents per $100 of assessed value for next year, despite an increase in revenue from property values.

“There’s just too much uncertainty right now and we just haven’t had the time to really project the specificity needed,” says Rick Humphrey, Parkland’s chief financial officer. 

The $130 million loss presented to county commissioners comes only from cuts to a program called Medicaid Disproportionate Share Hospital, which compensates hospitals with a large share of Medicaid and uninsured patients. 

Parkland treats the most Medicaid and uninsured patients in the Dallas-Fort Worth area. Unlike private providers such as Baylor Scott & White Health and Medical City Healthcare, the county’s safety net system doesn’t receive much in the way of commercial payments from major health insurance companies to supplement the cost of caring for lower income patients. (Medicaid’s reimbursement rates are generally about 30 percent below that of private insurers, according to the health policy nonprofit the Commonwealth Fund.)

Parkland’s “commercial mix” makes up about 7 percent of its annual revenue, Humphrey says, which is why the cuts from Washington are so concerning. Supplemental government programs and additional revenue from property taxes make up about two-thirds of Parkland’s budget. The last third comes from Medicaid, Medicare, and that smaller commercial mix.

“These are direct payments for providers to deliver healthcare,” says Katherine Yoder, Parkland’s vice president of government relations. “If we are not paid adequately, then we can’t deliver that care. We have to limit that care and it will directly impact their constituents.”

Part of Yoder’s job is to advocate for governmental revenue streams. She spends her days in Austin and D.C. asserting the importance of public hospitals while pushing back against sentiments that supplemental programs are plagued by waste and fraud. 

Diana Forester, health policy director for the Austin-based nonprofit Texans Care for Children, says families and patients will likely feel the impact of federal policy changes as soon as November, when the enrollment period for 2026 insurance plans opens. It’s personal to her, too. She expects the Affordable Care Act plan that insures her family to triple in price if the tax credits expire. The subsidies saved them enough money for a month’s worth of groceries. Alternatives are also becoming more expensive; she reports that her Austin pediatrician is now selling individual strep tests, flu shots, and other a la carte options to patients.

The administrative changes to Medicaid will make it harder for people to enroll, which Forester believes will hit children and pregnant mothers hardest. Without health insurance, she says, fewer kids will be screened to detect medical concerns early in their development. Forester says it’s “a lot harder to intervene and to turn things around” when developmental issues are detected at school when the child is 4 or 5 instead of in a doctor’s office years earlier. And it’s more expensive.

She says she’s spoken with pediatricians who are deciding whether to continue accepting Medicaid patients. The megabill also limits some immigrants’ access to Medicaid and Medicare, which covers people over the age of 64 and some with disabilities.

The Texas Legislature could find ways to fund these lacerated programs; states administer the program and have the power to add more funding from their own budgets. But amid uncertainty, families like Forester’s are having difficult conversations. She’s encouraged her friends and family to take care of all of their medical appointments as soon as possible—before the cuts come. “We just don’t know what that world’s gonna look like,” Forester says. “I do think it will be catastrophic to our state healthcare infrastructure. It’ll just mean less people accessing care and then delayed care, which means worse outcomes.” 

She’s reminded of the dire circumstances that led to the launch of Medicaid and Medicare in 1965. People were dying from lack of healthcare, she says. Churches and nonprofits tried to fill the gap, but the need was too great. “That’s what makes me really worried about this overall political shift,” Forester says. “They want to privatize everything. The ramification of that is, I think, people are going to die.”

Instead of panicking, Parkland officials who oversee the system’s finances are electing to wait and see how Texas responds to the federal policies. They’re targeting what is in their control, such as lengths of stay. Patients could be discharged sooner if diagnostic tests are done on time and staff coordinates quickly with family members, for instance. Efficiencies could lead to fewer patients in Parkland’s units, and nurses could float to other floors or have their hours reduced.

Still, there’s a widespread acknowledgment that the looming budgetary hammer will force tough decisions. “While we do expect this to have a significant negative impact to Parkland, we don’t know exactly how negative it’s going to be,” says Keri Disney-Story, the health system’s senior vice president of finance. “We know that there’s going to be some rough seas on the horizon.”

Humphrey chooses to stay grounded by his sense of purpose. He keeps a small gift on a shelf in his home as a reminder. A woman mailed him a Bible inscribed with a note about her daughter, who was going blind but couldn’t find care at other Dallas-Fort Worth providers. Humphrey helped her daughter qualify for a Parkland program that provides financial assistance. After treatment, her daughter’s vision was restored. “Thank you so much for intervening,” the woman wrote in the Bible, “and for helping my daughter get covered at Parkland.” That story, Humphrey says, is one of many created because of who Parkland serves. 

The stakes couldn’t be higher, but Humphrey says he isn’t losing sleep just yet.

“Maybe now’s a new day,” he says, “but the point still is valid that Parkland is going to be here and we will find a way to make this work.”

Kelli Smith is a staff writer for The Lab Report. [email protected].

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