Oregon is confronted with substantial changes to its health care system following the recent federal tax and spending bill signed into law by President Donald Trump. This legislation, marking the largest tax cuts in U.S. history, also emphasizes immigration enforcement and border security. However, it introduces significant cuts to federal health care funding. The most impactful change is the projected $1 trillion reduction in Medicaid, which is the joint federal-state program that provides health care for the nation’s poorest residents and those with disabilities. In Oregon, where over 1.4 million residents benefit from Medicaid through the Oregon Health Plan, these cuts pose a daunting challenge. This coverage includes nearly a third of the state’s population, with over half of the children relying on Medicaid. As federal contributions dwindle, state health officials express concerns that about 200,000 Oregonians could lose their health coverage, presenting tough decisions for lawmakers, health care providers, and insurers.
Rising Challenges in Medicaid Funding
The newly implemented bill enforces stricter Medicaid eligibility requirements, significantly influencing states such as Oregon that expanded coverage under the Affordable Care Act (ACA). The new rules require able-bodied adults aged 19 to 64, who gained eligibility through the ACA’s Medicaid expansion, to work, volunteer, or attend school for at least 80 hours a month. While exceptions exist for parents of young children, individuals with chronic medical conditions, and caregivers, the Oregon Health Authority estimates that approximately 462,000 Oregonians will need to comply with these new standards. Despite meeting work requirements, many are at risk of losing coverage due to the administrative burden of maintaining up-to-date paperwork. Rigorous documentation demands present a barrier to retaining benefits for many, as opposed to failing eligibility criteria.
Further complicating matters, the frequency of eligibility confirmation has increased, with income and work verification checks now mandated every six months starting in 2026. This is a sharp deviation from Oregon’s current practice of conducting Medicaid eligibility reviews every two years to alleviate administrative tasks and ensure continuity of coverage. The prior policy had been uniquely crafted in Oregon, developed with federal approval, and was supported by research addressing “churn” — the phenomenon where individuals lose coverage due to paperwork errors rather than actual eligibility changes. The intensified verification process threatens to disrupt Medicaid rolls significantly, leading to a pronounced potential loss of federal funding, with the Oregon Health Authority estimating an annual shortfall of up to $1.4 billion, accumulating to more than $16 billion over a decade.
Financial Pressures on Hospitals and Insurers
A notable reduction within the federal bill is the decrease in supplemental Medicaid reimbursements to hospitals. Currently, Oregon hospitals benefit from a provider tax set at 6%, which allows the state to procure additional federal funding, subsequently redistributed in the form of higher reimbursements. These funds have traditionally enabled hospitals to recover more than they initially contribute. However, the new law reduces the provider tax cap to 3.5% between 2028 and 2033 for states like Oregon with expanded Medicaid, whereas states without such expansion can maintain the higher cap. These adjustments threaten to cost Oregon at least $4 billion in combined state and federal Medicaid funding by 2032, with losses potentially surpassing $11 billion over a decade. Additionally, hospital payments known as “state-directed payments,” designed to elevate reimbursement rates, will face new limits in expanded Medicaid states, now capped at 100% of Medicare rates.
These financial constraints have triggered concerns from the Hospital Association of Oregon regarding the financial sustainability of the state’s hospitals. The association highlights the necessity for alternative solutions to counteract the dwindling federal Medicaid funding, especially amidst the existing financial strain on the health care system. Notably, Providence Health & Services has already announced layoffs, eliminating 600 positions, 134 of which are in Oregon, with more cuts possible in the future. Samaritan Health Services is also contemplating the closure of two maternity health units. The economic pressures trickle down further to the ACA Marketplace plans, anticipating a rise in premium costs with the expiration of federal subsidies introduced during the COVID-19 pandemic. These subsidies, critical in lowering Affordable Marketplace plan costs, when not extended, would likely see reduced enrollment in Oregon’s health insurance marketplace.
Projected Health Care Landscape and Expectations
Oregon is facing significant changes in its health care system following the enactment of a federal tax and spending bill signed by President Donald Trump. This legislation, which includes the largest tax cuts in U.S. history, also focuses on immigration enforcement and border security. However, it involves major reductions in federal health care funding, most notably a projected $1 trillion cut to Medicaid. Medicaid, a key federal-state program, offers health care services to low-income individuals and those with disabilities. In Oregon, the Oregon Health Plan serves over 1.4 million residents, covering nearly a third of the state’s population, with more than half of the children dependent on this program. With shrinking federal contributions, state health officials express serious concern that up to 200,000 Oregonians could lose their health care coverage. This scenario presents difficult choices for lawmakers, health care providers, and insurers, who must navigate these challenges to continue supporting vulnerable populations.
