Does Donald Trump’s Funding Freeze Impact Medicaid? What We Know

The Trump administration’s pause on federal grants has the potential to implicate nearly all government agencies. So far, experts say it’s uncertain how Medicaid funding could be disrupted by the funding freeze.

Why It Matters

Medicaid serves low-income Americans who often do not qualify for health insurance via their work. More than 74 million Americans were enrolled in Medicaid in the fall of 2024 and could be impacted by the funding freeze.

What To Know

The White House ordered a pause on all federal grants, loans and financial assistance for government agencies on Monday.

The memo outlined that “financial assistance should be dedicated to “advancing Administration priorities, focusing taxpayer dollars to advance a stronger and safer America.”

The memo also instructed agencies to submit “detailed information on any programs, projects, or activities subject to this pause,” and determine whether programs “support or provide services, either directly or indirectly, to removable illegal aliens,” or promote “gender ideology” or abortion.

While this has the potential to impact trillions of dollars toward healthcare research and education programs, a White House official told Fox News that the Office of Management and Budget is allowing government agencies with immediate deadlines to receive exemption status.

Still, Medicaid could possibly see some deep cuts. While states receive about 30 percent of their funding from the federal government, Medicaid has historically been the largest grant program to earn funding.

Just one day after the White House announced the federal funding freeze, the Medicaid payment portal went down, according to Trump’s Press Secretary Karoline Leavitt.

“The White House is aware of the Medicaid website portal outage,” Leavitt wrote on X Tuesday. “We have confirmed no payments have been affected — they are still being processed and sent. We expect the portal will be back online shortly.”

What People Are Saying

Press Secretary Karoline Leavitt said at a White House briefing Monday: “This is not a blanket pause on federal assistance and grant programs from the Trump administration. If agencies believe their programs are necessary and align with the president’s agenda, the Office of Management and Budget will review those policies.”

Alex Beene, a financial literacy instructor for the University of Tennessee at Martin, told Newsweek: “At this point, everything involving a potential freeze of Medicaid funding from the federal government is just speculative. States do see substantial grant amounts from the federal government to fund Medicaid, and any restriction to those would be devastating for recipients. States could step up and fund it themselves, but given the sheer cost involved, it would be financially difficult, if not impossible, for many to do. Ultimately, we won’t know until the administration provides further guidance if Medicaid is a part of this latest order.”

Michael Ryan, a finance expert and the founder of MichaelRyanMoney.com, told Newsweek: “While core Medicaid funding cannot be frozen unilaterally through executive order, the impacts of administrative funding freezes could still be significant.

Smile Insurance CEO Chris Fong told Newsweek: “The funding freeze is very disconcerting. There are a lot of programs that rely heavily on the affected federal funds including Medicaid. Medicaid is, in part, a federal grant funded program. A loss or long-term suspension of these funds would significantly affect the State’s budget.”

Kevin Thompson, a finance expert and the founder and CEO of 9i Capital Group, told Newsweek: “As of now, there is no clear indication of any disruption to Medicaid. Republicans campaigned on a promise not to touch entitlements, and so far, they have stayed consistent by not making changes to the program aside from block grants, and work requirements. Given the significant impact any changes could have on low-income families, it would be unfair to speculate on potential disruptions.”

What Happens Next

While the White House has not specified how Medicaid funding could change due to the federal grant pause, Ryan said Americans could experience delayed processing of enrollment and reimbursements.

There could be a strain on state budgets and cuts to option services like dental care or therapy, leading to decreased healthcare options in vulnerable communities and financial instability for rural hospitals, Ryan said.

“Extended uncertainty forces states to make difficult budget decisions,” Ryan said. “Healthcare facilities serving low-income communities may reduce capacity, with rural providers at highest risk.”

Fong said if the funds are paused for less than three months, state governments are less likely to face disruptions to Medicaid.

“If the suspension lasts over three months, the suspension could pause payments to medical providers and insurance companies, which could affect Medicaid members’ access to medical care,” Fong said. “Doctor’s offices, hospitals, and insurance companies could find themselves challenged to pay their monthly expenses especially if most people they serve are on Medicaid.”