Oregon’s new law offers a blueprint for replacing lost Medicaid funding

The 2025 federal spending bill (OBBBA Act) blocked Medicaid reimbursements for Planned Parenthood and some other large reproductive health providers for one year, triggering lawsuits and emergency funding responses from some states and health providers.

Clinics that rely on Medicaid funding for contraception, STI testing and treatment, cancer screenings, preventive care, and other health services for low-income patients are now facing uncertainty over how services will continue to be funded if the restrictions remain in place.

In response, Oregon passed HB 4127, a new law designed to replace lost federal funding with state dollars if clinics lose Medicaid reimbursement. The law creates a state-run reimbursement system and a backup grant program intended to help clinics continue operating even if federal Medicaid payments are cut off.

Oregon may also offer an early example of how states could begin diverging more sharply on women’s health access. While some states are exploring ways to preserve reproductive health funding, others are continuing efforts to restrict provider participation or reduce funding tied to abortion services.

Why It Matters

The debate over Planned Parenthood funding is often framed around abortion, but abortion services make up a relatively small share of the organization’s overall care.

According to Planned Parenthood’s 2024–2025 annual report, abortion services accounted for about 4% of the organization’s total medical services, while the vast majority involved contraception, STI testing and treatment, cancer screenings, pregnancy testing, and other preventive care.

Many reproductive health clinics also serve Medicaid patients and people in rural or underserved communities where health care options may already be limited. In Oregon, Planned Parenthood accounted for roughly 26% of contraceptive care visits among female Medicaid enrollees ages 15 to 49 in 2023, according to KFF analysis. Only office-based providers accounted for a larger share.

As legal battles continue, states are increasingly being forced to decide whether to replace lost funding themselves — or allow services and clinics to shrink.

How Oregon’s law works

Oregon’s new law creates a backup funding system intended to keep reproductive health clinics operating if federal Medicaid reimbursements are cut off.

Under HB 4127:

• the Oregon Health Authority would directly reimburse certain providers using state funds,
• payments could continue even if federal Medicaid funding becomes unavailable,
• and the state could issue grants to clinics that are removed from Medicaid entirely.

The law also requires Oregon to regularly review reimbursement rates to help ensure clinics can continue providing services.

Background

What changed in the federal law
The OBBBA Act blocks Medicaid reimbursements for certain large reproductive health providers that also provide abortion services outside narrow federal exceptions. The restriction applies to nonprofit providers that:

• primarily provide family planning or reproductive health services,
• provide abortion services beyond the Hyde Amendment exceptions,
• and received more than $800,000 in Medicaid reimbursements in 2023.

The policy is currently in effect while litigation moves through the courts.

It is important to note that federal Medicaid funding already cannot directly pay for most abortions under the Hyde Amendment. However, reproductive health providers still rely heavily on Medicaid reimbursements for their other services.

Providers and health policy groups have warned that losing Medicaid reimbursements could force some clinics to reduce services, lay off staff, or close locations entirely.

What states are doing
States are beginning to respond in very different ways. According to KFF's Women's Health Policy brief:

• Oregon, California, New York, Massachusetts, and Washington have discussed or pursued ways to preserve reproductive health funding.
• South Carolina, Texas, Arkansas, and Missouri remain tied to broader efforts to restrict provider participation or Medicaid funding connected to abortion services.

Resources

Oregon Capital Chronicle - Oregon governor signs laws to backfill Planned Parenthood funding, strengthen shield law
KFF - The Hyde Amendment and Coverage for Abortion Services Under Medicaid in the Post-Roe Era
Robert Wood Johnson Foundation - Millions Could Lose Medicaid Coverage Due to New Rules
American College of Obstetricians and Gynecologists - Policy Priorities: H.R.1
KFF - Filling in the Gap in Federal Medicaid Funding to Planned Parenthood: State Responses