BREAKING: Senate Parliamentarian Nixes Key Medicaid Provisions in GOP Budget Bill

The Senate official who must approve the special process that Republican members of Congress are engaged in as they attempt to pass their 2026 budget bill, on Thursday morning, June 26 ruled out major Medicaid-related provisions of the bill, sending Senate Republicans into a tailspin. The Senate Parliamentarian’s ruling strikes a heavy blow to the legislation, as the House and Senate Republicans are relying on a process called budget reconciliation in order to avert an otherwise-certain filibuster by Senate Democrats; under the terms of budget reconciliation, everything in a piece of legislation must relate to spending, and must also survive scrutiny along other dimensions, as specified by the Parliamentarian, Elizabeth MacDonough.

As the Associated Press’s Lisa Mascaro wrote on Thursday afternoon, “The Senate parliamentarian has advised that a Medicaid provider tax overhaul central to President Donald Trump’s tax cut and spending bill does not adhere to the chamber’s procedural rules, delivering a crucial blow as Republicans rush to finish the package this week. Guidance from the parliamentarian is rarely ignored and Republican leaders are now forced to consider difficult options. Republicans were counting on big cuts to Medicaid and other programs to offset trillions of dollars in Trump tax breaks, their top priority. Additionally, the Senate’s chief arbiter of its often complicated rules had advised against various GOP provisions barring certain immigrants from health care programs. Republicans scrambled Thursday to respond, with some calling for challenging, or firing, the nonpartisan parliamentarian, who has been on the job since 2012. Democrats said the decisions would devastate GOP plans.”

But Mascaro quoted Senate Majority leader John Thune (R-S.D.) as stating that “We have contingency plans,” and that we’re plowing forward.”

Still, Mascaro quoted Sen. Ron Wyden (D-Ore.) as noting that “the Republican proposals would have meant $250 billion less for the health care program, ‘massive Medicaid cuts that hurt kids, seniors, Americans with disabilities and working families.’”

As Mascaro noted, “The outcome is a setback as Senate Republicans hoped to get votes underway by week’s end to meet Trump’s Fourth of July deadline for passage. Trump is expected to host an event later Thursday in the White House East Room joined by truck drivers, firefighters, tipped workers, ranchers and others that the administration says will benefit from the bill as he urges Congress to pass it, according to a White House official. GOP leaders were already struggling to rally support for Medicaid changes that some senators said went too far and would have left millions without coverage. The nonpartisan Congressional Budget Office has said more than 10.9 million more people would not have health care under the House-passed bill; Senate Republicans were proposing deeper cuts.”

Also on Thursday afternoon, the New York Times’s Michael Gold reported on the development, writing, “Elizabeth MacDonough, the parliamentarian who enforces the chamber’s rules, said several of the measures in the legislation that would provide hundreds of billions of dollars in savings could not be included in the legislation in their current form. They include one that would crack down on strategies that many states have developed to obtain more federal Medicaid funds and another that would limit repayment options for student loan borrowers. Ms. McDonough has not yet ruled on all parts of the bill. The tax changes at the centerpiece of Mr. Trump’s agenda are still under review.”

That said, Gold wrote, “The decisions dealt a blow to Senate Republicans as they attempt to pass the behemoth legislation by Mr. Trump’s deadline. Party leaders had hoped to begin voting on the bill this weekend, in order to allow time for the House, which must give final approval to any changes, to pass it early next week, clearing it for the president’s signature. They were the latest provisions struck down by Ms. MacDonough, after she rejected several other sections, including Republicans’ initial plan to slash the food assistance program known as SNAP, an effort to sell federal land, and a move to limit federal judges’ power to enforce injunctions against the Trump administration. Republicans are moving the bill through Congress using special rules that shield it from a filibuster, depriving Democrats of the ability to block it. But to qualify for that protection, the legislation must comply with a rigorous set of budgetary restrictions established by the Senate to govern that process.”

As Gold noted, The Senate parliamentarian, an official appointed by the chamber’s leaders to enforce its rules and precedents, must evaluate those measures to ensure that every provision meets those requirements.” Further, he noted, “If Republicans are unable to make revisions and are forced to remove all the provisions Ms. MacDonough has ruled against, it would eliminate more than $500 billion of the bill’s intended spending cuts, according to a rough analysis by Bobby Kogan, a former Democratic Senate Budget Committee staffer and White House budget official who is now the senior director of federal budget policy at the left-leaning Center for American Progress.”

Senate Republicans reacted angrily to the development, The Hill’s Mychael Schnell reported on Thursday afternoon. “Hard-line House conservatives are fuming at the Senate parliamentarian’s decision to reject key Medicaid cuts in the upper chamber’s version of the ‘big, beautiful bill,’ urging their GOP colleagues to overrule the Senate referee — which would be a major departure from typical protocol,” Schnell wrote.

“Senate parliamentarian Elizabeth MacDonough issued her latest ruling Thursday morning, dealing a blow to major parts of the megabill, including shooting down a proposal to cap states’ use of health care provider taxes to collect more federal Medicaid funding, a provision championed by conservatives that would have generated billions of dollars in savings to pay for President Trump’s tax cuts. She also struck down an effort to restrict Medicare and Medicaid coverage for immigrants who are not citizens, among other provisions. Republicans can rework the provisions that were rejected in an attempt to make them compliant with the budget reconciliation rules, a move that could salvage some of the party’s plans. For now, however, the ruling is reverberating through GOP circles on Capitol Hill: Conservatives are seething, moderates are quietly breathing a sigh of relief, and Senate Majority Leader John Thune (R-S.D.) is rethinking the bill’s path toward passage in the upper chamber,” he wrote.

Importantly, Schnell reported, “Thune has said the upper chamber will not move to overrule the parliamentarian — ‘that would not be a good outcome for getting a bill done,’ he told reporters Thursday morning — but conservatives in both chambers are upping the pressure on their colleagues to challenge the referee’s ruling on the floor. ‘How is it that an unelected swamp bureaucrat, who was appointed by [former Sen.] Harry Reid [D-Nev.] over a decade ago, gets to decide what can and cannot go in President Trump’s One Big Beautiful Bill?’ Rep. Greg Steube (R-Fla.) wrote on social platform X. ‘The Senate Parliamentarian is not elected. She is not accountable to the American people. Yet she holds veto power over legislation supported by millions of voters. It is time for our elected leaders to take back control. @JDVance should overrule the Parliamentarian and let the will of the people, not some staffer hiding behind Senate procedure, determine the future of this country,’ he added.”

Per the provider tax at the center of contention in this moment, CNN’s Lauren Fox, Manu Raju, and Morgan Rimmer wrote on Thursday afternoon that “Chief among the denied provisions is the GOP’s proposed changes to taxes that states can impose to help pay for Medicaid coverage – an issue known as the provider tax – which could have raised $200 billion to pay for programs in the bill. Now, Republican leaders are scrambling to retool the provision so it can both meet Senate rules and pass muster with a divided Senate GOP conference. It’s unclear how long that process will take, according to several senior GOP sources,” the CNN reporters wrote. “The parliamentarian has made a number of other notable rulings, but her determination that increases to provider taxes do not comply with budget rules means Republicans will have to find another way to offset the cost of the president’s massive domestic policy bill just days before GOP leadership wanted to vote on it,” they reported.

This is a developing story. Healthcare Innovation will update readers as new developments emerge.