Texas was to receive $29.8 million in federal funds to pay for cancer screening, diabetes testing and contraceptive services for low-income women in the federal-state Medicaid program. The state budgeted $3.3 million to supplement the federal money.
Texas got $34 million last year and provided $7 million on its own.
Nearly 130,000 Texas women are enrolled to receive the services.
Texas lawmakers decided this year to exclude clinics affiliated with abortion providers, regardless of whether the clinics provide abortions. The federal agency charged with overseeing the Medicaid program said Texas could not restrict patients' access to particular providers and still get federal money.
The agency wrote to state officials Thursday saying it would phase out funding for that part of the Medicaid program within months.
"Medicaid law is clear -- patients, not state government officials, are able to choose the healthcare providers that are best for them and their families," Cindy Mann, deputy administrator of the U.S. Centers for Medicare & Medicaid Services, told reporters in a conference call.
"I just want to underscore how disappointed we are [at] having to take this action," Mann said.
Republican Texas Gov. Rick Perry said the state would use its own funds to continue the women's healthcare program.
He accused the Obama administration of placing its support for abortion rights ahead of women's health.
"Texans send a substantial amount of our tax dollars to Washington, D.C., and it is unconscionable that the Obama administration has essentially told Texas it will send our tax dollars back to fund this program only if we violate state law and include its pro-abortion allies," Perry said.
It was unclear where Perry would find the additional funding, since the state had already cut healthcare spending significantly, Planned Parenthood Gulf Coast spokeswoman Rochelle Tafolla told the San Antonio Express-News.
"Gov. Perry's claims that he'll find state funding to continue the program is dubious at best," Tafolla said. Where will he find this money? He already slashed $73 million from the state's family-planning program. He should reinstate that funding first."
The Centers for Medicare & Medicaid Services, a U.S. Health and Human Services Department agency, said the phased ending of the federal funding was intended to ensure low-income women don't abruptly lose access to healthcare screenings and contraceptives.