How the President’s budget impacts Medicaid and you 

If you’ve been following my recent blogs on Medicaid, welcome back! First, we talked about the federal budget process and its possible impact in Making Sense of the Medicaid Debate. Then, we discussed taking action and preparing for turbulence in What’s Next for Medicaid. Now, it’s time to dig into the latest government updates that might affect you, your practice, and your patients. My goal, as always, is to untangle the knots, keep things simple, and help you feel more grounded in uncertain times. 

What’s new? Two big updates you should know 

The federal government has been bustling with activity over two major topics that could shape healthcare delivery as we know it: 

1. The President’s FY 2026 budget proposal  
2. The Medicaid debate in Congress 

Here’s what’s happening, why it matters, and how it might affect the work you do every day. 

Breaking down the budget proposal 

Every year, the President releases a blueprint for federal spending—a kind of wish list for how the government might decide where to spend money. While this document holds no weight on its own (Congress gets the ultimate say), it’s a signal of priorities. And for FY 2026, potential healthcare cuts are taking center stage. 

Key targets in the budget 

The President’s budget proposes significant reductions for health programs. For therapists, clinicians, and agency owners, some of the most eyebrow-raising numbers include: 

• A 26% cut to the Department of Health and Human Services (HHS). This includes: 

• $18 billion from the National Institutes of Health (NIH). That’s a big slice from medical and psychological research funding. 

• $3.6 billion from the CDC. Public health initiatives, including many that support mental health, could be hit hard. 

Other funding reductions that might affect the services you provide include: 

• Substance Abuse and Mental Health Services Administration (SAMHSA): A $1 billion cut could slow down substance use and mental health programs, which are already stretched too thin. The administration’s direction seems to veer away from harm reduction (like syringe exchange programs) in favor of law enforcement-heavy drug policies. 

• Health Resources and Services Administration (HRSA): Losing $1.7 billion could limit support for underserved communities. 

What this might mean for you:  
Programs you rely on—for referrals, community education, or grants for vulnerable populations or resource-poor facilities—could face setbacks. If some of your patients depend on these services, they may experience disruptions. 

To review the specifics, you can find the full budget proposal here. 

Medicaid reform in the spotlight 

The President’s budget isn’t the only headline. Congress is locked in sometimes-heated discussions on how to reduce Medicaid spending without dismantling it entirely. For all of you who work directly with Medicaid patients, here’s the latest breakdown of what policymakers are considering (and what’s still up in the air). 

Proposals on the table 

Congress is tossing around several ideas to reshape Medicaid financing. Some of these sound technical but could have big ripple effects, especially for mental health providers and agencies: 

1. Lowering the federal Medicaid assistance percentage (FMAP): Right now, the federal government reimburses states for at least 50% of Medicaid costs. Talk of lowering this baseline would push states to contribute more from their budgets, potentially leading to fewer Medicaid services.  
2. Work requirements for Medicaid access: Work requirements would make Medicaid eligibility depend on employment for certain populations. This could cause coverage gaps for unemployed or underemployed patients, especially those burdened by mental health challenges.  
3. Medicaid per capita caps: Imagine if the federal government gave a fixed amount of funding per Medicaid recipient instead of reimbursing actual costs. States exceeding their cap might scale back benefits, tighten eligibility, or reduce provider reimbursements. It’s a big concern for practices relying on Medicaid payments.  
4. Medicaid block grants: Instead of reimbursing states based on costs and needs, block grants would provide a lump sum. This could give states more flexibility, but also less funding security, which might further squeeze reimbursements for providers. 

What this might mean for you:  
Medicaid recipients could face more barriers to access, whether through stricter eligibility rules, reduced services, or fewer providers willing to accept (potentially lower) reimbursements. If your practice serves low-income communities, changes like these could directly impact your patients and payment streams. 

You can explore these Medicaid reform options in depth with resources like this overview. 

What to watch moving forward 

Personally, I’ll be keeping an eye on the Energy and Commerce Committee as they review Medicaid reform bills. These reviews are important because they’ll reveal more about how the proposals could impact patients, healthcare providers, and state budgets.  

Right now, House Republican leaders have delayed these reviews until the week of May 12, but there might be more delays. Tracking the progress of these efforts is key to understanding potential changes for low-income communities and healthcare providers. For updates, check out the 2025 reconciliation tracker. 

The bigger picture 

If all of this feels chaotic, that’s because it is. On one hand, lawmakers are trying to balance federal spending. On the other, Medicaid serves over 80 million people in the U.S. The tension between these priorities often creates policies with unintended consequences. 

For mental health providers, here’s what’s worth remembering:  

• Not all proposals will pass, and those that do might take time to implement.  

• Many solutions are still in the idea stage, meaning there’s room for input, advocacy, and adjustment.  

• No single policy change defines the future of Medicaid or healthcare. Adjustments are always part of the system. 

If you’re worried about how this might hit your practice financially, consider reviewing your Medicaid payor mix or advocacy strategies now. Connecting with professional networks or organizations can be a great step toward proactive planning. 

A note on optimism: Historically, there’s been pushback from both sides of the aisle on extreme Medicaid cuts, and advocates (clinicians like you!) continue to push for compassionate, balanced solutions.  

If you’d like a peek at the political pressures surrounding these debates, Republican perspectives both for and against Medicaid cuts are worth a quick read.

Want to dive deeper? Join us for an informal, fact-first webinar where we’ll separate noise from nuance and dive into the current Medicaid debate—no spin, no politics. I’ll be answering your questions and discussing what’s being proposed in Congress, what it could mean for your patients and practice, and how you can prepare. Sign up now to reserve your spot! 

Takeaways for your practice 

I’m committed to keeping you informed, but more importantly, I’m here to remind you of this: You’re not in this alone. Healthcare policy impacts us all differently, but your work—to support your clients and communities—is the constant the system relies on. Whether Medicaid evolves, expands, or shrinks slightly, the role of therapists and clinicians in shaping individual and societal wellness remains vital.  

It’s always a lot to take in, and that’s why I’ll continue breaking it down for you. For now, keep doing what you do best. I’ll keep monitoring these updates and bringing clarity to the chaos.  

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