In July, Congress passed their mega-budget bill, HR 1. We have previously expressed our concerns about the impact of the bill on kids and families. Today, we want to address what it means for the Texas Legislature. The sweeping bill has implications for a number of policy areas, but this blog will focus on three implications for the Legislature regarding SNAP nutrition assistance and Medicaid health insurance.
1) Starting in 2026, state leaders must invest an additional $90 million per year in the administration of SNAP nutrition assistance to maintain the current program for eligible Texans.
SNAP helps families with low-wage jobs put food on the table to feed their children. SNAP plays a critical role in providing 1.6 million Texas children the nutrition they need to grow, stay healthy, and succeed in school.
States and the federal government previously split SNAP administrative costs 50-50, but HR 1 now requires states to cover 75 percent. While other provisions of HR 1 take effect a couple years down the road, this cost shift to states begins on October 1, 2026, well before the 90th legislative session.
How will Texas cover the costs? State leaders have tools at their disposal to address unforeseen costs in the interim and can direct a transfer of funds within the budget to cover this cost. We will be working with state leaders to understand what approach they plan to use and the timeline for their plan.
2) During the 2027 legislative session, lawmakers must appropriate hundreds of millions in additional SNAP funding to maintain the program — unless the state reduces the SNAP error rate below 6%.
Under HR 1, this cost shift kicks in for states that make errors with more than 6 percent of their SNAP applications. The higher a state’s “error rate,” the more it has to contribute. The current error rate for Texas is 8.6 percent for FY2024, which translates into an additional $716 million appropriation per year. As state agencies and lawmakers begin the budget process for the 2027 legislative session, they will need to include this new funding unless the state reduces the error rate below 6 percent.
It’s important to keep in mind that HR 1 includes other SNAP cuts and restrictions beyond the cost shifting described above. For example, about 275,000 Texans are now at risk of losing food assistance because the bill extends current SNAP work requirements to adults between age 55 and 65 as well as parents of children 14 and up.
3) The Texas Medicaid program — reshaped to meet Congressional Republicans’ vision — will still be the backbone of the state’s health care system, giving the Legislature an opportunity to leverage the program during the next session.
The Congressional Budget Office estimates that the health care cuts in HR 1 will leave 10 million additional Americans uninsured. However, the biggest health care cuts in the bill target areas outside of Texas Medicaid:
- Cuts to the Affordable Care Act (ACA) Marketplace will hit every state, ending insurance coverage for about 350,000 Texans who use HealthCare.gov (not including the Texans who will see insurance premiums skyrocket if Congress fails to extend ACA enhanced premium tax credits by December 31).
- States that expanded Medicaid to include low-income adults will see the bulk of the Medicaid cuts.
HR 1 does include concerning Medicaid provisions that hit Texas, such as pausing a new rule that would have reduced red tape for Medicaid applicants. Nonetheless, now that HR 1 has passed, it is clear that Medicaid will continue to play a major role in health care for Texas kids, pregnant and postpartum women, people with disabilities, and low-income seniors in nursing homes.
That means the Texas Legislature can use the next legislative session to strengthen Medicaid to better serve Texans. During the 2025 session, there was uncertainty about the future of the Medicaid program as Congress drafted HR 1. In this context, the Texas Legislature passed a few bills related to Medicaid — including legislation to extend Medicaid coverage to cover lactation support for new mothers and technology funding to repair the application system — but state lawmakers largely took a wait-and-see approach to Medicaid policy. For example, the House passed bills to extend Medicaid coverage to doulas and a “Parent Notification” bill to inform families when their children are confirmed eligible for Medicaid, but the bills stalled in the Senate. Other bills would have added key children’s mental health services to Medicaid coverage. During the 2027 legislative session, lawmakers should take up these and other bills to leverage the post-HR 1 Medicaid program.
We look forward to working with state leaders and our partners to ensure that SNAP and Medicaid meet the needs of Texas kids as much as possible now that HR 1 is the law of the land.
