Fiscal Year 2026 Funding Update 

On July 31, the Senate Committee on Appropriations approved its Fiscal Year (FY) 2026 Labor, Health and Human Services, Education, and Related Agencies (Labor-HHS) funding bill. AMCHP is grateful to Chair Collins, Vice Chair Murray, and the full Committee for advancing a bill that serves as a strong starting point to improve the health and well-being of mothers, children, and families. Of note, the Committee decided to reject the proposed reorganization and funding cuts to the Department of Health and Human Services (HHS). While these funding levels are subject to change as negotiations continue, we are especially encouraged by the Committee’s attention to the myriad, interacting funding streams across HHS that support MCH priorities. The text of legislation, along with the accompanying report, is available for review.  

Select provisions in the bill include: 

Health Resources & Services Administration (HRSA) 

• $8 million to the Maternal Mental Health Hotline 
• $20.883 million to Heritable Disorders in Newborns and Children 
• $145.25 million to Healthy Start 

The Committee also approved $799.7 million for the Title V Maternal and Child Health (MCH) Block Grant. While this overall funding is a step in the right direction, we are deeply concerned about the proposed $14 million reduction to the Special Projects of Regional and National Significance (SPRANS) portion of the Block Grant. 

SPRANS supports vital work at academic institutions and public health departments, including research, workforce development, and systems-level innovation. In FY 2024, SPRANS funding of $210.1 million supported nearly 281 grantees across 59 states and jurisdictions, enabling programs in innovation, training, technical assistance, quality improvement, genetic services, newborn screening, and treatment for conditions such as sickle cell disease and hemophilia. A cut of this magnitude could have sweeping negative impacts on MCH populations, public health professionals, and the future workforce. 

Centers for Disease Control and Prevention (CDC) 

• $113.5 million Safe Motherhood/Infant Health line within the Division of Reproductive Health, which funded programs such as ERASE MM (federal support for maternal mortality review committees), Perinatal Quality Collaboratives, the Pregnancy Risk Assessment Monitoring Systems (PRAMS), and more. 
• $23 million to CDC’s Surveillance for Emerging Threats to Mothers and Babies (SET-NET) program 
• $5.25 million Division of Oral Health 

Further, the Senate bill maintains funding for core CDC programs, such as chronic disease prevention, tobacco control, injury prevention (including firearm injury research), global health, and immunization, rejecting the Administration’s FY 2026 proposals to eliminate, restructure, or consolidate these initiatives. 

Payment Management System 

Lastly, the Committee included language in recognition of reported delays and disruptions of fund disbursement through the Payment Management System (PMS), which hinders the ability of states and other grantees to administer federal programs. The bill requires HHS to brief Congress within 30 days on the system’s status and any changes HHS has made to improve grantees’ ability to access funds in a timely manner. Additionally, the bill directs HHS to promptly report any outages exceeding 48 hours or payment delays longer than 14 days.  

Overview of the Reconciliation Package 

Separate from the Congressional appropriations process, on July 4, President Trump signed the reconciliation package (H.R. 1) into law. We previously shared that this package includes some of the most significant health policy provisions to be made into law since the Affordable Care Act (ACA) and has the potential to significantly destabilize the health of millions, including MCH populations and those already facing the greatest risks. The bill is estimated to:  

• Increase the number of people without health insurance by about 15 million, bringing the country back to pre-ACA levels;   
• Cut $911 billion from Medicaid, the safety net program that covers more than 40% of births in the U.S. and provides over 1.5 million low-income women with prenatal and postpartum care; and   
• Cut $186 billion from the Supplemental Nutrition Assistance Program (SNAP), the largest cut to SNAP in history.   

Select provisions include:  

Medicaid 

Work Requirements, Section 71119 

This provision requires non-disabled adults between the ages of 19 and 64 to work or participate in approved activities for at least 80 hours each month to keep their Medicaid coverage. States will have some flexibility to offer temporary exemptions for people dealing with short-term challenges like a serious illness, natural disaster, or high local unemployment. Certain groups are automatically exempt from the requirement, including pregnant individuals, people with serious health conditions, members of federally recognized tribes, and caregivers of young children (under age 13) or children with disabilities. 

To enforce this policy, states must check whether a person met the work requirement during the three months before they applied. They also need to confirm that the person met the requirement at least once while enrolled and again before their eligibility is reviewed. 

• Impact on maternal and child health: While pregnant individuals and some caregivers are exempt, many low-income parents, particularly those with children over the age of 13, will still be subject to these requirements. Loss of coverage due to reporting issues, fluctuating work hours, or misunderstanding of exemptions could leave caregivers uninsured, limiting access to essential health services, such as mental health services, chronic disease management, and other supports essential to parenting. When parents lose Medicaid, children are at increased risk of losing coverage as well, even if they remain eligible. These disruptions can interfere with preventive pediatric care, immunizations, and treatment for developmental or behavioral conditions. 
• Impact on state budgets: This provision is projected to cause the largest Medicaid coverage losses nationwide, with estimates ranging from 9.9 to 14.9 million individuals losing health insurance. States will face substantial new administrative burdens related to verifying work activity, processing exemptions, and monitoring compliance on an ongoing basis. Increased churn in enrollment will raise operational costs and contribute to higher health care spending, as individuals who lose coverage will delay care until conditions worsen—resulting in greater use of emergency services. States will also need to invest in workforce verification systems and customer support infrastructure to implement and enforce the requirement. 
• Effective December 31, 2026, or earlier if implemented by a state. 

Provider Taxes, Section 71115 

This provision stops states from introducing new provider taxes or increasing the amount of existing ones beyond current levels. It also changes what’s known as the “hold harmless” threshold, the limit on how much provider tax revenue a state can use to draw down federal Medicaid funds. For states that haven’t expanded Medicaid, the threshold stays at 6%. For states that have expanded, the limit will gradually decrease from 6% to 3.5%, starting in fiscal year 2028 and dropping by 0.5% each year until it reaches the new cap. 

• Implications for State Budgets: These restrictions will reduce states’ capacity to leverage provider taxes to maximize federal Medicaid funding. As a result, overall Medicaid budgets are likely to shrink, compelling states to consider cuts to benefits, eligibility, or provider reimbursement rates. Financially vulnerable rural hospitals will face increased risk of closures or reduced services, further straining local health systems. 
• Effective October 1, 2026. 

Sunsetting Increased FMAP Incentive for New Expansion States, Section 71114 

This provision eliminates the 5 percentage point increase in the federal medical assistance percentage (FMAP) that is currently available as a financial incentive for states newly expanding Medicaid under the Affordable Care Act. This incentive was designed to encourage remaining non-expansion states to extend Medicaid coverage to low-income adults. 

• Impact on maternal and child health: The removal of this financial incentive will reduce the likelihood that non-expansion states will pursue Medicaid expansion. As a result, low-income women of reproductive age in these states will have less access to health insurance during critical periods before, during, and after pregnancy, limiting access to timely and comprehensive care. Children are also impacted when parents lack coverage, as parental insurance status is closely tied to children’s enrollment and continuity of care. This will hinder access to preventive services, screenings, and early treatment for health conditions. 
• Impact on state budgets: Without the enhanced FMAP, future Medicaid expansion would require a greater financial commitment from states. This could delay decisions to expand coverage or reduce the likelihood of expansion altogether. In turn, states will face continued pressure on uncompensated care systems and higher emergency care costs, particularly in hospitals that serve large numbers of low-income and uninsured patients. 
• Effective January 1, 2026. 

Expansion FMAP for Emergency Medicaid, Section 71110 

This provision lowers the FMAP that states can receive for emergency medical care provided to non-permanent residents and other non-citizens. Instead of getting the higher 90% match available under Medicaid expansion, states will only receive their regular Medicaid matching rate. States can still choose to cover pregnant individuals and children in these groups, but the federal government will no longer cover as much of the cost. 

• What this means for maternal and child health: This change will reduce access to time-sensitive emergency care for pregnant individuals and children who are ineligible for full Medicaid due to immigration status. The reduced federal funding could discourage states from offering or maintaining emergency Medicaid coverage for these groups. Safety-net providers serving high volumes of immigrant patients may experience increased financial strain, potentially compromising the availability and continuity of maternal and pediatric care.
• What this means for state budgets: States with large immigrant populations are likely to face significant new financial burdens. By capping the FMAP at the regular Medicaid rate, states will absorb a greater share of emergency care costs that were previously supported by enhanced federal funding. This shift will require difficult budget decisions, including reallocation of state Medicaid dollars, reductions in other services, or increased pressure on uncompensated care systems. 
• Effective October 1, 2026. 

Payment Limit for State Directed Payments (SDPs), Section 71116 

This provision directs HHS to revise rules on how states make payments to health care providers through Medicaid managed care plans. In Medicaid expansion states, these payments will be capped at 100% of the Medicare rate for the same service. Non-expansion states will be allowed to pay up to 110% of the Medicare rate. If no Medicare rate exists for a particular service, states must use the payment amount established in their standard Medicaid state plan.   

Additionally, directed payments to rural hospitals will be reduced by 10 percentage points annually starting January 1, 2028, until they reach the applicable cap. The provision also expands grandfathering eligibility to include states that made a “good faith” effort to obtain prior approval before May 1, 2025. 

• Impact on maternal and child health: Lower Medicaid reimbursement rates will discourage providers from participating in the program. This can limit access to care for pregnant individuals and children covered by Medicaid, potentially leading to longer wait times, greater travel distances to providers, and missed preventive or routine health appointments. Reduced provider participation could especially affect critical maternal and pediatric services, including prenatal care, pediatric check-ups, and developmental screenings. 
• Impact on state budgets: Capping directed payments tied to Medicare rates will reduce the revenue states receive through these mechanisms, shrinking overall Medicaid budgets or forcing states to use general funds to fill shortfalls. States with large Medicaid populations and rural states are expected to be most heavily impacted. Some states could face significant losses in federal matching funds, while others that rely heavily on SDPs to supplement low base Medicaid rates will need to adjust managed care contracts. Rural hospitals risk closures or service reductions, which could require emergency state funding to preserve access to care. 

Rural Health 

Rural Health Transformation Program, Section 71401 

Section 71401 provides $10 billion per year from FY 2026 through FY 2030, totaling $50 billion, to the Centers for Medicare & Medicaid Services (CMS) to support rural health transformation efforts. To access funding, states must apply to CMS by December 31, 2025, with a rural health transformation plan and a certification outlining how the funds will be used in line with program requirements. States approved for participation will receive funding over five years. 

Funding amounts will be determined based on a state’s rural population, the number of rural health care facilities, and the condition of hospital infrastructure and capacity. 

• Impact on maternal and child health: Many rural hospitals serve as key access points for maternity care, newborn services, and pediatric care. However, a growing number of these facilities have closed obstetric units or eliminated perinatal services due to financial constraints. Without specific requirements that states invest this funding in maternal and child health services, rural families will continue to face long travel distances for prenatal care, labor and delivery, postpartum support, and pediatric checkups. If states prioritize other infrastructure needs or administrative investments, these funds will not reach the providers serving pregnant individuals, infants, and young children—missing a critical opportunity to improve maternal and child health outcomes in rural areas. 
• Impact on state budgets and rural health systems: The program was created in part to help offset the impact of anticipated Medicaid cuts on rural hospitals, many of which operate with narrow or negative margins, 44% reported operating losses in 2023. While the funding offers potential support, it does not fully replace the expected loss of Medicaid dollars and will impose new administrative responsibilities related to application, reporting, and oversight. The program also does not require funds to be directed specifically to rural providers, which will limit its effectiveness in stabilizing front-line care. States will need to make additional policy decisions to ensure the funding reaches providers and programs most at risk. 

Food Nutrition Programs 

SNAP Work Requirements, Section 10102 

This provision raises the age for the Supplemental Nutrition Assistance Program (SNAP) work requirement to 64 and extends the requirement to parents or guardians of children over the age of 10. It also limits the ability of states to waive the requirement, allowing waivers only in areas where the unemployment rate exceeds 10%. 

• Impact on families: This change is expected to affect approximately 2.7 million families. An estimated 1.2 million families, including 1.5 million children, will receive lower SNAP benefits because a family member no longer meets the work requirement and is no longer counted as part of the household for benefit calculations. Another 1.5 million families are expected to lose their benefits entirely. On average, those receiving reduced benefits will lose $254 per month—over $3,000 per year. Families with children will lose an average of $229 per month. Nearly 24,000 families with children will lose SNAP benefits entirely, while another 870,000 will receive reduced benefits, most often because a parent no longer qualifies to be counted in the household benefit. 

Cost Sharing Requirements, Section 10105 

This provision ties the federal share of SNAP benefit payments to each state’s payment error rate. Previously, the federal government covered 100% of SNAP benefit costs. Under the new policy: 

• States with an error rate between 6% and 8% will receive an 85% federal match, and must cover the remaining 15%. 
• States with an error rate between 8% and 10% will receive an 80% federal match, and must cover 20%. 
• States with an error rate of 10% or higher will receive only a 75% federal match, leaving 25% of benefit costs to the state. 
• Impact on state budgets: As of 2024, 44 states had SNAP error rates above 6%, meaning most states would immediately become responsible for covering a portion of SNAP benefits, an expense they have never previously had to absorb. For many, this will represent a significant new financial obligation. States with already limited administrative capacity will struggle to improve accuracy quickly enough to avoid moving into higher-cost tiers. As a result, states will face difficult budget decisions, such as cutting other programs, reducing SNAP eligibility, or limiting outreach and enrollment efforts, to cover the new costs. 
• Effective Beginning FY 2028. 

Administrative Cost Sharing, Section 10106 

This provision reduces the federal reimbursement rate for state administrative costs related to the SNAP from 50% to 25%. As a result, states will be required to cover 75% of these administrative costs on their own. 

• Impact on state budgets: This change will significantly increase state spending on SNAP operations. For many states, it could mean tens of millions of dollars in additional annual costs. The financial strain will be especially severe during times of economic hardship, when SNAP enrollment tends to rise and administrative needs grow. Without additional state funding to offset the reduced federal support, state agencies will be forced to make cuts, such as reducing staff, slowing application processing, or limiting outreach and enrollment efforts. These changes could make it harder for eligible individuals and families to access nutrition assistance when they need it most. 
• Effective Beginning FY 2027. 

These policy changes come at a time when the country continues to battle unacceptable infant and maternal mortality and morbidity rates. Further, these policies would place significant financial strain on states, forcing states to make difficult decisions about what services they can continue to offer, such as the life-saving postpartum Medicaid extension that, as of February 2025, 48 states and the District of Columbia have adopted.    

Moving forward, AMCHP’s Government Affairs Team will continue to follow the FY 2026 appropriations process and provide additional updates. In the meantime, we encourage you to review the following resources for more information:  

• AMCHP Title V MCH Block Grant: FY26 Funding Ask Sheet 
• AMCHP CDC Safe Motherhood Portfolio: FY26 Funding Ask Sheet 
• AMCHP CDC SET-NET: FY26 Funding Ask Sheet  

To hear more on the policy developments impacting MCH health, please register for the AMCHP Policy & Partnership Town Hall Series. Please don’t hesitate to reach out to our Government Affairs Team with questions: Sherie Lou Santos (ssantos@amchp.org), Gabrielle Galusha (ggalusha@amchp.org), and Karina Collins (kcollins@amchp.org).