As Senate Budget Bill Careens Towards Passage, Medicaid Details Loom Large
On Monday, June 30, as the U.S. Senate moved forward towards passing that body’s version of the 2025 budget bill, officially named the “One Big Beautiful Bill Act” (OBBBA), it appeared that the bill would cut more than $1 trillion from Medicaid and cause massive loss of insurance coverage. But even as the bill underwent what’s called a “Vote-a-Rama,” a process in which members of both political parties can offer amendments, disputes between the Senate Republican leadership and the Senate Parliamentarian, Elizabeth MacDonough, as well as last-minute dealmaking inside the Senate Republican Caucus, the situation remained exceptionally fluid and unstable. This report summarizes what is known at this moment about the bill, which is supported by most Republicans, but opposed by all Democrats; but readers should be advised that significant elements in the bill remained in flux even as a final floor vote approached on the Senate floor on Monday afternoon.
As to its content, CBS News’s Kaia Hubbard and Caitlin Yilek wrote on Monday afternoon that, “At the center of the bill is an extension to Mr. Trump's 2017 Tax Cuts and Jobs Act, slated to sunset at year's end, seeking to make the cuts permanent in what has been a key priority for Senate Republicans. It also includes increased spending for border security, defense and energy. But along with different dynamics in the Senate, Republicans have also been contending with input from the Senate's rulekeeper, known as the parliamentarian. She has been weighing in on the bill's components to determine whether they may fly under the reconciliation process, which allows the GOP to move forward with the bill without any support from across the aisle.”
Hubbard and Yilek wrote that, as provisions of the bill remained in flux on Monday afternoon, even as it was already on the floor of the Senate, “The legislation includes restrictions on Medicaid, which provides government-sponsored health care for low-income and disabled Americans. Like the House-passed bill, the legislation imposes work requirements for some able-bodied adults and more frequent eligibility checks. But the Senate parliamentarian determined that a measure cutting federal funds to states that use Medicaid infrastructure to provide health care coverage to undocumented immigrants, along with banning Medicaid from covering gender transition services, isn't in compliance with Senate rules. The parliamentarian also weighed in on the provider tax, which states use to help fund their portion of Medicaid costs, in a blow to the Senate GOP's initial plan.”
And, they wrote, “Senate Republicans have proposed steeper cuts to Medicaid funding, in part by incrementally lowering provider taxes from 6 percent to 3.5 percent by 2032. The timeline is delayed by one year from the Senate GOP's initial proposal, after the issue became one of the bill's sticking points in the Senate in recent weeks. It's a departure from the House-passed bill, which sought to lower federal costs by freezing states' provider taxes at current rates and prohibiting them from establishing new provider taxes.”
The CBO weighs in
Late on Saturday, June 28, the Congressional Budget Office published preliminary estimates of the impact of the Senate bill on the Medicaid program and on health insurance coverage and access in the U.S.
Summarizing what the CBO found, Edwin Park of the Georgetown University McCourt School of Public Policy’s Center for Children and Families, wrote on Sunday, June 29, that, “In the late evening of Saturday, June 28th, the Congressional Budget Office (CBO) issued preliminary estimates of the current version of the Senate Republican budget reconciliation bill now being debated on the Senate floor. The CBO estimates confirm that the Senate Republican reconciliation bill as it now stands would cut Medicaid to an even harsher extent than the House-passed reconciliation bill would (the ‘One Big Beautiful Bill Act’ or H.R. 1). Here are some quick takeaways:
The Senate Republican reconciliation bill would cut gross federal Medicaid and Children’s Health Insurance Program (CHIP) spending by $1.02 trillion over the next ten years. That means the Senate bill’s Medicaid and CHIP cuts are $156.1 billion or 18 percent larger than even the House-passed bill’s draconian cuts of $863.4 billion over ten years.
These larger gross Medicaid and CHIP cuts are driven by changes to the House-passed bill that would further restrict state use of provider taxes to finance Medicaid, eliminate eligibility for many lawfully present immigrants, cut federal funding for payments to hospitals furnishing emergency Medicaid services, and further reduce certain supplemental payments to hospitals and other providers (known as state-directed payments). The spending effect of these additional cuts is modestly offset by increased Medicaid and CHIP spending from provisions not in the House-passed bill including a rural health transformation program, increased federal Medicaid funding for Alaska and Hawaii, and expanded waiver authority for home- and community-based services.
Overall, the Senate Republican reconciliation bill’s Medicaid, CHIP, Affordable Care Act marketplace, and Medicare provisions would increase the number of uninsured by 11.8 million in 2034, relative to current law. In comparison, the House-passed bill would increase the number of uninsured by 10.9 million in 2034. (More detailed CBO estimates of the specific Medicaid health coverage effects under the Senate Republican reconciliation bill are not yet available. For example, CBO estimates the House-passed bill’s Medicaid and CHIP provisions would cut Medicaid enrollment by 10.5 million by 2034 and by themselves, increase the number of uninsured by 7.8 million by 2034.)
As noted, these CBO estimates are preliminary and do not include more detailed analysis of the impact on Medicaid enrollment and health coverage. In addition, the Senate Republicans are likely to make further amendments to the reconciliation bill’s Medicaid and CHIP provisions to avoid ‘Byrd Rule’ violations and to try to ensure Senate passage in coming days,” Park concluded.
Terms of the Stabilization Fund questioned
Another element in the bill is a rural hospital stabilization fund, created, as CBS News’s Hubbard and Yilek noted, “after some GOP senators expressed concern over how rural hospitals could be impacted by the Medicaid restrictions, allocating $25 billion for rural hospitals over the same period that the provider taxes would be lowered.”
But, per that, leaders at the Washington, D.C.-based National Rural Health Association on Monday shared forward a June 23 press release regarding that organization’s published research, developed for the NRHA by the Manatt consulting firm.
The press release stated that “The latest Senate text establishes a $25 billion fund for rural health care providers. The fund is not just for hospitals but would also be available to a broad range of health care providers, including rural hospitals, rural health clinics, federally qualified health centers, and community mental health centers. All states could qualify; to qualify, states would need to submit a rural health transformation fund application to the Centers for Medicare & Medicaid Services (CMS) by September 30, 2027. Available funding: The provision would allocate $10 billion in each fiscal year (FY) 2028 and 2029, $2 billion in FYs 2030 and 2031, and $1 billion in FY 2032. Distribution approach: 50 percent of the funding would be allocated equally across all states with approved applications. The remaining 50% would be distributed to states at the discretion of the CMS Administrator.”
However, the Manatt analysts wrote, “The new analysis highlights that the $25 billion fund falls far short of what is needed. Even if every single dollar of the new fund went exclusively to rural hospitals, it would not fill even half of the gap in funding for rural hospitals created by the OBBBA. More specifically, the OBBBA generates $58 billion in Medicaid cuts over the next ten years for rural hospitals. But the rural transformation fund is limited to $25 billion over this time period, which is only 43 percent of previous funding levels (if all the funds were to go to rural hospitals). The fund also needs to fill the funding gap faced by other providers serving rural America, including rural health clinics, federally qualified health centers, community mental health centers and opioid treatment programs. When this imperative is taken into account, it becomes even more clear that the rural transformation fund does little to solve the problems for rural health care created by passage of OBBBA. Many of America’s states with large rural populations would fare especially poorly under the fund. Manatt’s estimates (which, as noted, for purposes of this analysis apply all of the available funds to rural hospitals), show that southern and mid-western states with sizable rural populations that have expanded Medicaid face the largest remaining gaps. These states are hit hard by the OBBBA cuts aimed at expansion states (i.e., the phasing down of provider taxes to 3.5% of revenue; work requirements, and six-month renewal). For them, the dollars available from the rural transformation fund will not offset losses due to Medicaid cuts.”
Families USA leaders speak to “cascading impacts”
On Monday afternoon, as the legislative process moved forward in the Senate, the leaders of the Washington, D.C.-based Families USA held a press briefing, in which healthcare consumer leaders spoke to some of the potential impacts of the Senate bill, as it was constituted in the moment.
Anthony Wright, Families USA’s executive director, made an opening statement, and then turned to Sophia Tripoli, the organization’s senior director of health policy, and to three state-level leaders—Alex Carter, policy advocate at Maine Equal Justice; Amy Blouin, president and CEO, Missouri Budget Project, and Hyun Namkoong, deputy director of health advocacy, North Carolina Justice Center—all of whom made extensive comments.
“We’ll see closures of hospitals and other organizations because of the provisions of this bill,” Wright said. “As the Senate votes on a series of amendments, we want to provide a final closing argument to our senators, about why they should oppose the bill. Impacts to coverage, health costs, healthcare, and to specific communities. The House bill was bad; the Senate bill is worse. Now it’s over 11 million folks who would lose coverage, on top of an additional 4-5 million who would lose coverage because of the lack of the extension of premium subsidies under the ACA and because of administrative processes. It’s the biggest rollback in health insurance and the biggest cut to Medicaid since its creation in 1965, and a huge pullback” from established health insurance coverage, he added.
“We are particularly heartbroken to see this bill move through the process; it’s nothing short of devastating,” Carter said. “We believe that 60,000 people in Maine will lose healthcare coverage; over 30,000 people will lose SNAP benefits; that’s a significant number of people in Maine,” she added.
Indeed, Carter said, “Four of our rural hospitals, if not more, may be at risk of closure. We could lose upwards of 4,000 healthcare worker jobs in those communities, and you can see how that would cascade, particularly in those parts of the state that are already experiencing healthcare deserts. And this would leave a $190-million hole in our state budget. And we hear from people every day who are already making impossible choices—whether or not to pay rent, seek childcare, seek healthcare—already now. People are not able to sustain any more constraints on their budget, and they’re really, really afraid. Maine Equal Justice has joined many groups, calling on Susan Collins to oppose this bill,” she added, referring to Senator Susan Collins, who had voted for cloture, but had said she remained skeptical of the bill, as of Monday morning.
Speaking of her state of North Carolina, Namkoong stated that “We are the most recent state to expand Medicaid. We know what it’s like to have a coverage gap, to have people unqualified to participate in either Medicaid or the ACA marketplaces. We’ve worked with many thousands of people on that. Our state legislature expanded Medicaid in a bipartisan way, and our implementation was one of the fastest ones in recent history. And to see the threat of having it completely undone is devastating.”
And Blouin, speaking of the economic impact of the cuts, said that “In rural communities, it is the hospital, the clinic, and the school, that are the major employers other than agriculture. We’re going to see a significant negative impacts in rural areas, cascading impacts. And Truman Medical Center in KC, 42 percent of its revenue is from Medicaid, and that’s an urban hospital. So when these cuts happen, they’ll impact those healthcare employers throughout the states and country. That will have a domino effect. And we are manufacturing a crisis,” she said, referring to the Senate leaders advancing the bill.
Indeed, Families USA’s noted that “We’ve looked at how the cuts would impact rural hospitals. And the number of hospitals newly at risk of closing—not only do the cuts impact revenue and force hospitals to cut service lines, lay off workers, or close their doors altogether, this puts them at risk of being bought by systems, and that results in increased prices, and less access to care.”
The situation in the U.S. Senate was in exceptional flux at the time of the publication of this report, with legislative details in continuous change. Healthcare Innovation will continue to update its readers as new developments emerge.
