KFF Health News: Health Centers Face Risks as Government Funding Lapses
October 03, 2025
KFF Health News: Health Centers Face Risks as Government Funding Lapses
Approximately 1,500 federally funded health centers, which provide essential services to millions of low-income individuals, are facing severe financial difficulties. The ongoing government shutdown has exacerbated existing revenue cuts, leaving many health center leaders deeply concerned.
As a result of these funding challenges, some community health centers may be forced to reduce their medical and administrative staff or cut back on services. The potential closures of these centers could lead to increased pressure on already overcrowded hospital emergency rooms. “This is the worst time in all the years I have been working in health care,” stated Jim Mangia, president and CEO of St. John’s Community Health, which operates 28 clinics serving over 144,000 patients across Los Angeles, Riverside, and San Bernardino counties in California. “We are facing federal cuts and extreme state cuts that will impact services.”
St. John’s and other federally qualified health centers provide primary care and a variety of additional services either free of charge or on a sliding fee scale. Nationwide, these centers serve nearly 34 million patients in some of the most underserved areas of the country.
Funding for these health centers comes primarily through two channels: grants from the federal Community Health Center Fund and reimbursements from programs like Medicaid, which provides health insurance for low-income individuals and those with disabilities. Both funding routes are currently under threat.
Recently, Congress has only approved grant money in small increments. In March, lawmakers extended funding until September 30, but that funding expired when the Republican-controlled Congress failed to pass a new funding law, resulting in the current government shutdown.
Advocates argue that health centers require long-term funding solutions to ensure stability, ideally through a multiyear funding commitment. In early 2024, the centers received $4.4 billion in grants, but the National Association of Community Health Centers is pushing for at least $5.8 billion annually for the next two years to maintain operations.
According to Vacheria Keys, vice president of policy and regulatory affairs for the association, the health center safety net is facing “multiple layers of challenges.” The new spending law, dubbed the “One Big Beautiful Bill Act” by Republicans, proposes significant cuts to Medicaid, further threatening the financial stability of health centers.
In 2023, Medicaid accounted for 43% of the $46.7 billion in health center revenue. Advocates warn that reduced Medicaid payments will widen the gap between funding and operational costs.
Additionally, funding for workforce programs is crucial to support healthcare delivery, as centers struggle to hire and retain staff. Feygele Jacobs, director of the Geiger Gibson Program in Community Health at George Washington University, emphasizes the need for this support.
The first community health clinics emerged in the 1960s, with bipartisan support for funding over the years. However, the current struggle began when the Trump administration froze domestic aid through a January memo, preventing some centers from accessing already approved grant money. This led to closures and mergers of health centers in states like Virginia.
As these cuts loom, patients are expected to face new challenges. Changes to Medicaid under President Trump’s tax-and-spending law include requirements for enrollees to report work or service hours to maintain their benefits. Moreover, the expiration of enhanced tax credits for Affordable Care Act health insurance at the end of the year could lead to increased costs for consumers if Congress does not act.
Democrats are advocating for the extension of these tax credits, which help shield consumers from rising insurance costs, while Republicans argue that the issue should be addressed separately.
“Consumers will need more support than ever,” Jacobs noted, warning that Medicaid cuts and the expiration of tax credits could “potentially throw people out of coverage.”
With 90% of health center patients living at or below the federal poverty level, and 40% identifying as Hispanic, the stakes are high. “We are also receiving 300 calls per day from patients concerned about their coverage,” Mangia added.
While Republicans are not directly targeting health centers, their support for Medicaid cuts will significantly impact clinic finances. Many Republicans argue that Medicaid spending has ballooned and that reducing its growth is essential for sustainability.
State and Local Support
In addition to seeking long-term federal funding, health centers are looking to local communities for support. Some states have already allocated funds for health centers in their annual budgets, including Connecticut, Minnesota, Illinois, and Massachusetts. States like Maryland, Oregon, and Wisconsin have also provided support.
However, the sustainability of this funding remains uncertain. While some states have increased their support, others, like California, are making cuts to their programs in anticipation of Medicaid reductions.
In Los Angeles, Mangia suggests collaborating with county partners, noting that L.A. County has a population of about 10 million. “We can tax ourselves to increase funding for health care services,” he said. Health center leaders are forming a coalition that aims to include key stakeholders in the county’s healthcare system—community health centers, clinics, hospitals, doctors, health plans, and unions—to explore the possibility of a ballot initiative for healthcare funding.
“We are learning that the federal government and the state government are not reliable when it comes to continuing to fund health care,” Mangia concluded.
By Paula Andalo
KFF Health News is a national newsroom that produces in-depth journalism about health issues and is one of the core operating programs at KFF—an independent source of health policy research, polling, and journalism. Learn more about KFF.
October 03, 2025
KFF Health News: Health Centers Face Risks as Government Funding Lapses
Approximately 1,500 federally funded health centers, which provide essential services to millions of low-income individuals, are facing severe financial difficulties. The ongoing government shutdown has exacerbated existing revenue cuts, leaving many health center leaders deeply concerned.
As a result of these funding challenges, some community health centers may be forced to reduce their medical and administrative staff or cut back on services. The potential closures of these centers could lead to increased pressure on already overcrowded hospital emergency rooms. “This is the worst time in all the years I have been working in health care,” stated Jim Mangia, president and CEO of St. John’s Community Health, which operates 28 clinics serving over 144,000 patients across Los Angeles, Riverside, and San Bernardino counties in California. “We are facing federal cuts and extreme state cuts that will impact services.”
St. John’s and other federally qualified health centers provide primary care and a variety of additional services either free of charge or on a sliding fee scale. Nationwide, these centers serve nearly 34 million patients in some of the most underserved areas of the country.
Funding for these health centers comes primarily through two channels: grants from the federal Community Health Center Fund and reimbursements from programs like Medicaid, which provides health insurance for low-income individuals and those with disabilities. Both funding routes are currently under threat.
Recently, Congress has only approved grant money in small increments. In March, lawmakers extended funding until September 30, but that funding expired when the Republican-controlled Congress failed to pass a new funding law, resulting in the current government shutdown.
Advocates argue that health centers require long-term funding solutions to ensure stability, ideally through a multiyear funding commitment. In early 2024, the centers received $4.4 billion in grants, but the National Association of Community Health Centers is pushing for at least $5.8 billion annually for the next two years to maintain operations.
According to Vacheria Keys, vice president of policy and regulatory affairs for the association, the health center safety net is facing “multiple layers of challenges.” The new spending law, dubbed the “One Big Beautiful Bill Act” by Republicans, proposes significant cuts to Medicaid, further threatening the financial stability of health centers.
In 2023, Medicaid accounted for 43% of the $46.7 billion in health center revenue. Advocates warn that reduced Medicaid payments will widen the gap between funding and operational costs.
Additionally, funding for workforce programs is crucial to support healthcare delivery, as centers struggle to hire and retain staff. Feygele Jacobs, director of the Geiger Gibson Program in Community Health at George Washington University, emphasizes the need for this support.
The first community health clinics emerged in the 1960s, with bipartisan support for funding over the years. However, the current struggle began when the Trump administration froze domestic aid through a January memo, preventing some centers from accessing already approved grant money. This led to closures and mergers of health centers in states like Virginia.
As these cuts loom, patients are expected to face new challenges. Changes to Medicaid under President Trump’s tax-and-spending law include requirements for enrollees to report work or service hours to maintain their benefits. Moreover, the expiration of enhanced tax credits for Affordable Care Act health insurance at the end of the year could lead to increased costs for consumers if Congress does not act.
Democrats are advocating for the extension of these tax credits, which help shield consumers from rising insurance costs, while Republicans argue that the issue should be addressed separately.
“Consumers will need more support than ever,” Jacobs noted, warning that Medicaid cuts and the expiration of tax credits could “potentially throw people out of coverage.”
With 90% of health center patients living at or below the federal poverty level, and 40% identifying as Hispanic, the stakes are high. “We are also receiving 300 calls per day from patients concerned about their coverage,” Mangia added.
While Republicans are not directly targeting health centers, their support for Medicaid cuts will significantly impact clinic finances. Many Republicans argue that Medicaid spending has ballooned and that reducing its growth is essential for sustainability.
State and Local Support
In addition to seeking long-term federal funding, health centers are looking to local communities for support. Some states have already allocated funds for health centers in their annual budgets, including Connecticut, Minnesota, Illinois, and Massachusetts. States like Maryland, Oregon, and Wisconsin have also provided support.
However, the sustainability of this funding remains uncertain. While some states have increased their support, others, like California, are making cuts to their programs in anticipation of Medicaid reductions.
In Los Angeles, Mangia suggests collaborating with county partners, noting that L.A. County has a population of about 10 million. “We can tax ourselves to increase funding for health care services,” he said. Health center leaders are forming a coalition that aims to include key stakeholders in the county’s healthcare system—community health centers, clinics, hospitals, doctors, health plans, and unions—to explore the possibility of a ballot initiative for healthcare funding.
“We are learning that the federal government and the state government are not reliable when it comes to continuing to fund health care,” Mangia concluded.
By Paula Andalo
KFF Health News is a national newsroom that produces in-depth journalism about health issues and is one of the core operating programs at KFF—an independent source of health policy research, polling, and journalism. Learn more about KFF.
