Children’s hospitals set to lose billions from OBBBA

The Children’s Hospital Association warns that the One Big Beautiful Bill Act will gut America’s network of pediatric hospitals by billions of dollars, KFF Health News reported Sept. 10. 

The bill, which became law July 4, will establish stricter Medicaid eligibility requirements for immigrants and nondisabled adults, with changes scheduled as early as January 2027. The Congressional Budget Office estimates the bill will reduce Medicaid spending by nearly $1 trillion and 11.8 million more individuals will be uninsured by 2034.

The reduction “cannot be achieved without directly affecting coverage and care for Arizona’s kids, especially the most vulnerable among them,” Robert Meyer, CEO of Phoenix Children’s, told KFF Health News. 

Medicaid accounts for approximately half of Phoenix Children’s revenue. Unless some of the cuts are reversed, the health system is set to lose about $172 million annually from Medicaid — which supports treatment for low-income children covered by Medicaid and has funded pediatric clinics and increased mental health staffing. 

The Children’s Hospital Association represents more than 200 children’s hospitals across the U.S. The association told KFF Health News that a provision of the law, which will cap states’ directed payments to hospitals starting 2028, will threaten more than one-third of children’s hospitals’ total Medicaid revenue. It will also affect about 14% of their overall operating revenue. 

For example, Norfolk, Va.-based Children’s Hospital of The King’s Daughters allots more than $11 million annually in state-directed payments. A hospital spokesperson told KFF Health News the payments help pay for specialized pediatric medical, surgical and psychiatric physicians in high demand for its patient population. 

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