Delays in federal health funding

Politico

07-02-2025

With help from Mackenzie Wilkes
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Driving The Day
FUNDING FREEZE HAVOC — Providers and lawmakers fear that payments for some federally funded health programs aren't being dispersed amid confusing federal guidance stemming from President Donald Trump's executive orders on gender and diversity.
That includes funding for community health centers; Head Start, a school readiness program for low-income families; and other so-called safety-net programs.
Background: A flurry of orders from the White House in recent weeks has caused delays to federal funding, including January executive orders targeting 'the use of Federal resources to advance Marxist equity, transgenderism, and green new deal social engineering policies,' calling that 'a waste of taxpayer dollars that does not improve the day-to-day lives of those we serve.'
Last week, federal officials ordered a blanket freeze on most federal funding before rolling the order back on Monday. At least two judges have also ordered a suspension of the blanket freeze. At the same time, state Medicaid payment portals experienced an outage, causing confusion nationwide.
The downstream effects of the funding freeze have become clearer this week. Here are some key impacts.
— Some community health centers, which primarily serve low-income patients, have said they haven't received the federal funding that keeps them afloat, forcing some to temporarily shutter.
— Rep. Diana DeGette (D-Colo.), ranking member of the House Energy and Commerce Health Subcommittee, said a safety-net hospital in her state couldn't provide medical services last month because of a freeze in Medicaid funds.
— Dozens of Head Start providers serving nearly 20,000 children report delays in accessing federal grant dollars, according to survey data from the National Head Start Association, an industry group representing the providers. That's despite officials later clarifying that Head Start was excluded from the freeze. HHS has said 'technical issues,' now resolved, affected the payment management system last week, but some providers may experience lags, Mackenzie reports.
On Thursday, several Democratic lawmakers demanded answers from the Trump administration. Senate health leaders Chuck Schumer (D-N.Y.) and Ron Wyden (D-Ore.) wrote to the administration asking why the Medicaid platform was inoperable.
'These repeated blackouts are causing panic, confusion, and unnecessary frustration for our doctors, community health centers, hospitals and patients,' Schumer said in a statement.
Virginia's Democratic senators, Tim Kaine and Mark Warner, also sent a letter Thursday to HHS asking why some health centers — including those in Virginia — weren't receiving funding.
An HHS spokesperson told Pulse that the administration was aware of 'ongoing technical issues' affecting the payment system.
'The system is back up and running now, but some PMS users are experiencing lags due to the high volume of request. HHS is working to expedite a resolution ASAP,' they said.
The confusion comes as many federal employees face a looming decision to resign and take deferred compensation. On Thursday, a judge hit pause on the plan until at least Monday, giving workers a bit more time.
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In Congress
MEDICAID CUTS NOT OFF THE TABLE — Despite Medicaid 'love' from President Donald Trump, his administration and House Republicans are poised to make deep cuts in the program, POLITICO's Ben Leonard and Adam Cancryn report.
Trump said last week that Medicaid was on the list of programs he wants to protect. He said he won't 'do anything' to Medicaid, except in cases of abuse or waste, claiming it wouldn't impact beneficiaries. 'It will only be more effective and better,' Trump said.
The comments come as Republicans explore a sweeping overhaul of existing health policies that would likely include major changes to Medicaid to fund a significant portion of party-line legislation to enact Trump's domestic agenda.
Working with the White House, the House Energy and Commerce Committee was already on track to slash hundreds of billions of dollars from programs within the panel's purview to offset the budget reconciliation effort, much of it coming from Medicaid.
Now, fiscal hawks in the House Republican Conference are calling for even deeper spending cuts, threatening to exacerbate an already difficult task of explaining to constituents why Republicans want to scale back a program that insures more than 70 million Americans.
'He wants to protect people's health care, and so do we,' said Energy and Commerce Chair Brett Guthrie (R-Ky.) in an interview. 'I'm afraid we're going to get to a point where this is going to implode with $1.8 trillion worth of debt. It's better to fix it now than later. … I absolutely agree with the sentiment he's saying.'
A White House spokesperson said the Trump administration 'is committed to closely examining Medicaid to improve care for beneficiaries while identifying waste and abuse.'
While further discussions with the White House are needed, Guthrie said, he expects that many of the proposals would still fit Trump's criteria.
KENNEDY PROCEDURAL VOTE — Robert F. Kennedy Jr. is one step closer to becoming the head of all federal health agencies after a key procedural vote Thursday night.
The Senate voted 52-47 to move to executive session on Kennedy's nomination, setting up a confirmation vote next week.
Kennedy still has to clear two more votes in the coming days to become Health and Human Services secretary as Democrats used delaying tactics permitted under Senate rules, indicating their particular displeasure with the Kennedy nomination.
Still, it's been all but certain Kennedy will be confirmed as HHS secretary since Tuesday when Republican senators on the Finance Committee united to move his bid forward in a party-line vote. That included Senate Health, Education, Labor and Pensions Committee Chair Bill Cassidy (R-La.), a doctor who initially said he was 'struggling' with Kennedy's reluctance to disavow false claims about vaccine safety but then agreed to support Kennedy after receiving several assurances from him.
During his confirmation hearings, Kennedy said he'd prioritize combating chronic diseases that he believes are the result of additives in the food Americans eat and pollution in the environment. He said health agencies have spent too much time and money on infectious diseases, allowing chronic diseases to grow.
NEW SUBCOMMITTEE TARGETS COVID SPENDING — A congressional panel dedicated to a Trump administration effort to cut spending in the government is taking aim at Covid-19-era funds in its first hearing.
The House Oversight Subcommittee on Delivering on Government Efficiency will hold its first hearing on Feb. 12 titled 'The War on Waste: Stamping Out the Scourge of Improper Payments and Fraud.'
According to a notice from Chair Marjorie Taylor Greene (R-Ga.), the hearing will examine improper payments and fraud, which the notice says were exacerbated during the Biden administration by 'massively expanding Medicaid spending and rushing pandemic-era funding out the door without proper oversight mechanisms in place.'
Why it matters: House Republicans and the new administration have criticized the Biden White House's handling of Covid-19 and threatened retribution.
Hearing witnesses include a former FBI agent who's now part of The Foundation for Government Accountability, a conservative think tank and director of an antiwelfare fraud organization.
AROUND THE AGENCIES
RTO PENDING — A memo from the Office of Personnel Management sent to federal employees earlier this week urged managers to prepare to bring workers back to the office, but CMS told its employees this week it doesn't have a date yet.
According to a Thursday email sent to CMS employees and viewed by POLITICO, CMS upper management told employees that they have no further details on when they will be expected back in the office and will update them once officials speak with the American Federation of Government Employees, which represents many HHS employees.
The AFGE did not respond to requests for comment, but the group has pushed back on orders from the Trump administration impacting federal employees, including an early resignation offer many employees received last month. CMS also did not respond to requests for comment.
In a separate email viewed by POLITICO, CMS employees were told by leadership not to speak with reporters and instead direct them to the official media email.
Names in the News
Kelly Langford, formerly an online communications director at HHS, is joining PhRMA's public affairs team as senior director working on paid media. Kim McCune, former vice president at Weber Shandwick, is also joining the PhRMA public affairs team as senior director of executive visibility.
Dr. Meena Seshamani has been named Maryland Department of Health secretary, pending confirmation. She most recently was deputy administrator and director at CMS' Center for Medicare.
WHAT WE'RE READING
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