GOP Senators Wrangle Over Key Medicaid-Related Provisions in Budget Bill
As Republicans rush to craft a version of the 2026 federal budget bill, that bill is undergoing major changes in the Senate that could set up a potentially fatal clash with House Republicans, who were barely able to pass their version of the bill on May 22.
As the Washington Post’s Jacob Bogage reported on Monday evening, June 16, “Senate Republicans on Monday suggested massive changes to President Donald Trump’s second-term legislative agenda, setting up a potential brawl with the GOP-controlled House by slashing the child tax credit and state and local tax deductions while temporarily preserving some Biden-era climate programs. The lower chamber passed Trump’s One Big Beautiful Bill in late May. The legislation aims to attach an extension of tax cuts from Trump’s first term with new campaign promises — including no taxes on tips or overtime wages — and hundreds of billions of dollars of new spending on immigration enforcement and national defense.”
Bogage reported that “The Senate Finance Committee released its proposals Monday afternoon, and they are some of the most controversial in the mammoth legislation. The panel is responsible for codifying trillions of dollars in tax cuts and pays for them largely by slashing Medicaid, the federal health insurance program for low-income individuals. Because of the power dynamics between the two chambers — and Republicans’ self-imposed July 4 deadline — the Senate bill is more likely to become law,” he added. And he noted that “Senate Majority Leader John Thune (R-South Dakota) and Finance Committee Chair Mike Crapo (R-Idaho) treated the House bill as an opening offer; House Speaker Mike Johnson (R-Louisiana) has insisted his conference’s narrow majority requires the Senate to hew closer to what his chamber drafted. Congress is also staring down a midsummer deadline to raise the nation’s debt limit, the amount of money the federal government can borrow to pay for already authorized spending. If lawmakers don’t act to increase the borrowing cap, the country faces a devastating default,” he noted.
And, he wrote, “Republicans are using a process called ‘budget reconciliation’ to bypass a Democratic filibuster in the Senate. But even in the Senate, significant divides remain between Republicans. Sen. Rand Paul (Kentucky) opposes the legislation because it raises the country’s debt limit. Sens. Susan Collins (Maine), Josh Hawley (Missouri), Jerry Moran (Kansas) and Lisa Murkowski (Alaska) have voiced concerns over cuts to Medicaid. Sen. Ron Wyden (Oregon), the top Democrat on the Finance Committee, called the legislation ‘class warfare.’”
With regard to the bill’s healthcare provisions, Bogage reported Monday evening that “The Senate goes much further than the House on limiting an accounting maneuver states rely on to pull in more federal Medicaid dollars. It would cap the taxes states charge providers at 3.5 percent of their net patient revenue, instead of limiting them to 6 percent, as the House bill would do. It would apply to states with Medicaid expansion, which would need to gradually reduce their taxes down to meet the 3.5 percent threshold by 2031. Nursing homes and facilities for people with intellectual disabilities would be exempted. States return these taxes to providers in the form of higher Medicaid payments, which are then matched by higher federal payments.” Per that, he quoted Sen. Hawley as saying, “Sounds to me like this needs some work.”
On Monday evening, The Hill’s Alexander Bolton also reported on key provisions of the bill, as it’s been drafted by the Republicans in the Senate Finance Committee; he wrote that Senator Mike Crapo “presented the newly drafted provisions in the bill to Republican colleagues at a meeting Monday evening. Two Republican aides familiar with the legislation drafted by the Finance panel say it will go further than House-passed language to tighten Medicaid eligibility requirements and to restrict states from using health care provider taxes to collect more federal Medicaid funding.”
Bolton wrote that the Senate Finance committee draft “includes several changes that put Senate Republicans on a collision course with the House. The measure encompasses the most controversial sections of the bill, such as proposals to impose stricter work and eligibility requirements for Medicaid and to reduce the federal government’s share of Medicaid spending in states. It would raise the debt ceiling by $5 trillion, instead of the $4 trillion, the increase adopted by House Republicans. The debt ceiling language is a major problem for Sen. Rand Paul (R-Ky.), who has told leadership he won’t support the bill if it includes such a large extension of federal borrowing authority,” he wrote.
Further, Bolton reported, “Sen. Ron Johnson (R-Wis.), an outspoken fiscal conservative, told reporters Monday evening that he would oppose the bill if it came to the floor in its current form because it doesn’t go far enough to cut the $2.2 trillion annual deficit.” And he quoted Johnson as stating that “We’re not doing anything to significantly to alter the course of the financial future of this country. We’re not seriously addressing our long-term deficit and debt issues.” And he noted that with Paul and Johnson opposed to the measure, “Senate Republicans can afford only one more defection from their caucus and still pass the bill.”
And Bolton’s WSJ colleague Al Weaver late on Monday evening quoted Sen. John Hoeven (R.-N.D.) as stating that “ It’s just what you expect: Everybody’s got an opinion, and I think it’s going to be that way right up until we vote. It’s still a work in progress.” Weaver also noted that “Finance’s language included numerous changes from the House’s package, which Senate Republicans have been clamoring for. Headlining those are a proposal to tighten eligibility requirements for Medicaid and lower the provider tax in expansion states to 3.5 percent — down from 6 percent.”
Meanwhile, the Wall Street Journal’s Siobhan Hughes and Richard Rubin reported on Tuesday morning” that “Sens. Susan Collins (R., Maine) and Josh Hawley (R., Mo.), who have both repeatedly warned that some of the Medicaid changes could hurt rural hospitals, were among those who didn’t rush to embrace the legislation. The bill would effectively cap at 3.5 percent many of the so-called provider taxes that states use to help cover their share of the state-federal Medicaid program, down from the current 6%—forcing states to raise revenues elsewhere or shrink benefits. The cap, which would phase down in increments of 0.5% each year, reaching 3.5 percent in fiscal 2031, only applies to states that expanded Medicaid under the Affordable Care Act.”
What’s more, Hughes and Rubin wrote, “At the same time, the bill would reduce the supplemental payments paid to hospitals for Medicaid services, capping the funds at Medicare rates instead of the higher commercial rates. The 10 states that haven’t expanded Medicaid to childless, able-bodied adults would receive 110 percent of Medicare rates, preserving a deal struck in the House. Taken together, the provisions could prompt hospitals to lobby for lower taxes, since they would receive a reduction in supplemental payments. Spending hawks said that the changes to Medicaid didn’t go far enough,” they reported, and quoted Sen. Rick Scott (R.-Fla.) as stating flatly that “The cost of government is just too high.” And they quoted Johnson as saying that there was no way to fix the legislation by July 4.
And, Hughes and Rubin noted, “Senate GOP leaders are in a bind. They can lose only three votes in their 53-47 majority, and Rand Paul (R., Ky.) already appears dead set against any bill that contains a significant increase of the federal debt limit, which the Senate bill bumps up by $5 trillion. Moving the bill toward Collins and Hawley on Medicaid could cost votes on the Senate GOP’s right flank. Anything the Senate does would still have to go back through the House, which passed the bill 215-214. The House factions mirror the Senate factions. Since the House vote, both edges of the House GOP have urged senators to pull the bill in their direction, with conservative Freedom Caucus members pushing for deeper spending cuts, fiscal hawks cautioning against expanding deficits beyond the House bill’s $2.4 trillion figure and moderates warning that the bill they voted for went too far on cutting clean-energy credits.”
The environment right now in the Senate is exceptionally fluid, as the various competing factions among the members of the Republican Senate continue to dispute key provisions. Healthcare Innovation will continue to update readers as new developments emerge.
