The July 4 passage of the One Big Beautiful Bill Act has raised concerns in the pediatric healthcare community about the law’s funding cuts to Medicaid and the effect of those cuts on children’s healthcare nationally.
“This is really a potential significant blow when the industry is already struggling with some long-term, significant issues,” Matthew Cook, CEO of Washington, D.C.-based Children’s Hospital Association, told Becker’s.
Mr. Cook said children’s hospitals across the country are working to determine what the legislation will mean financially to help prepare for tough decisions. Given that Medicaid is administered through a federal-state partnership, children’s hospitals will be impacted in different ways, depending on how their state’s Medicaid funding is structured.
Mr. Cook also pointed to the legislation’s impact on state-directed payments and provider taxes, which could dismantle financial supports that were already acting as stopgaps.
“They’re Band-Aids because the base Medicaid reimbursement rate is so low it doesn’t remotely cover the cost of care,” he said. “These other funding streams came into place to be a Band-Aid for that. [Children’s] hospitals still lose money on Medicaid, even adding in these supplemental payments.”
Another concern for Mr. Cook is that the new law ties Medicaid funding to a Medicare benchmark, which he called “not valid” because most children’s hospitals lack Medicare patients. Mr. Cook said the legislation’s impact on the National Institutes of Health and on federal research funding generally could also significantly hurt children’s healthcare.
“Almost every large children’s hospital in this country is associated with a school of medicine, and those schools of medicine are not doing well because of the cuts to grant funding,” he said. “There are children’s hospitals that have said, ‘I’m going to do a hiring freeze of nonclinical staff.'”
While lawmakers might have initially written the legislation with good intentions, Mr. Cook said the ripple effects could be deeply disruptive and long-lasting.
“[There] are always unintended consequences,” he said. “We have to assume the bill was done with good intent … [but] there are unintended consequences [in] passing legislation like this, and it’s going to take a long time to mitigate the impact of it, because the healthcare system doesn’t turn on a dime. We have long-standing issues in terms of workforce, not just on the physician side, but on the nursing side and on other clinical types of roles.”
