Senate Passes Budget Bill, with Large Medicaid Cuts
At just after 12 noon on Tuesday, July 1, the U.S. Senate passed the 2026 budget bill advocated by President Donald Trump, which in his honor was named the “One Big Beautiful Bill Act” (OBBBA),” along nearly strict party lines, with all but three Republican senators supporting it, and all Democrats voting against it, and Vice President JD Vance casting the tie-breaking vote, to pass it 51-50.
As the New York Times’s Catie Edmondson, Carl Hulse, Michael Gold, and Megan Mineiro reported, “A divided Senate on Tuesday narrowly passed Republicans’ marquee bill to slash taxes and social safety net programs, as the G.O.P. muscled through deep internal rifts in a bid to deliver President Trump’s agenda. The 51-to-50 vote sent the legislation to the House, where its passage was far from certain even though Mr. Trump has demanded that lawmakers send the bill to his desk for enactment by July 4. Three Republicans, Senators Susan Collins of Maine, Thom Tillis of North Carolina, and Rand Paul of Kentucky joined all Democrats in voting against it, forcing Vice President JD Vance to cast the tiebreaking vote. It came after a brutal slog of debating, voting, and negotiating that lasted more than 24 hours, as party leaders worked through Monday and into Tuesday morning huddling with Republican holdouts — particularly Senator Lisa Murkowski of Alaska.”
The Times reporters wrote that, “In the end, she supported the legislation after G.O.P. leaders packed it with sweeteners for her state, including a provision aimed at insulating Alaska from some of the bill’s harshest impacts.”
Melanie Zanona quoted Thune as calling it “a historic day.” And The Hill’s Alexander Bolton wrote in a report published just after the bill’s passage, that “Thune hailed the bill as crucial extension of the expiring 2017 Tax Cuts and Jobs Act, which he called “one of the most successful economic policy pieces of legislation in history.” He warned that if it didn’t pass, families earning less than $400,000 a year would collectively see a $2.6 trillion tax increase and small businesses would see $600 billion in tax increases. And he defended the more than $900 billion in Medicaid spending cuts in the bill, which have generated strong pushback within his own conference. He said the bill would ‘make sure that the people who are supposed to benefit from Medicaid do, and that it doesn’t go to people who shouldn’t benefit from Medicaid.’”
On Monday evening, Kentucky Governor Andy Beshear had said on MSNBC that “This is going to impact the lives of every single American negatively. I cannot believe that those [senators] won’t represent the interests of their people.”
And, moments after the vote took place on the Senate floor on Tuesday, Senator Peter Welch (D-Vt.), told Chris Jansing of MSNBC, “I’m obviously very disappointed. This was a very significant turning point. We’re adding at least $2.5 trillion to the deficit, to fund tax cuts. And our healthcare system was already very fragile in this country, and we’ve just weakened it significantly.” Jansing noted that, in polls of Vermont residents from the weeks before the bill’s passage in the Senate, 67 percent of Vermonters opposed it, including 94 percent of Democrats, 21 percent of Republicans, and 69 percent of independents.
The Senate’s version of the budget bill was developed in an unprecedented manner, with changes being made to it even after it had been put onto the Senate floor for possible amendments, in a process called a Vote-a-Rama. That made it difficult for the Congressional Budget Office (CBO) to “score” the bill in terms of its impact. But late on Saturday, June 28, the CBO had published preliminary estimates, finding that the bill, as it was constituted on Saturday, would cut gross federal Medicaid and Children’s Health Insurance Program (CHIP) spending by $1.02 trillion over the next decade, and would cause 11.8 million Americans to lose health insurance. As Edwin Park of the Georgetown University McCourt School of Public Policy’s Center for Children and Families, wrote on Sunday, June 29, in summarizing the CBO’s findings, “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), and that the bill 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.”
AMA, AMGA, weigh in
The leaders of national associations representing providers and consumers had already on record against the bill’s provisions. On June 25, leaders of the American Medical Association came out strongly against the bill. Kevin B. O’Reilly, a senior news editor at the AMA, wrote that “The AMA is expressing concerns about the Senate budget-reconciliation bill, citing cuts to Medicaid and Children’s Health Insurance Program (CHIP) funding and changes in eligibility criteria that will reduce patients’ access to care and affect physician practices’ viability, particularly in rural and underserved areas. Additionally, the AMA pointed to the exclusion of the House-passed effort to connect Medicare physician payment to the cost of running a practice.” And he quoted Bobba Mukkamala, M.D., the AMA’s president, and a practicing otolaryngologist in Flint, Mich., as stating that “Patients across the country are already struggling to access care. Physician burnout, early retirements and—with the cost of running a practice constantly rising—the challenge of keeping a practice financially afloat are contributing to a physician shortage expected to reach 86,000 by 2036. Limiting access to a physician does not make patients healthier,” Dr. Mukkamala added. “In fact, it increases the risk of turning acute, treatable issues into costly chronic conditions. As work continues on this bill, we urge senators to listen to patients and physicians before making changes that reduce access to care.”
Similarly, leaders at the Alexandria, Va.-based American Medical Group Association (AMGA) had expressed alarm prior to the Senate’s passage of the bill, with Jerry Penso, M.D., AMGA’s president and CEO stating on June 17 that “Patients who are dropped from Medicaid will forgo care until they show up in our already overcrowded and strained emergency departments. Cuts of this magnitude will only result in fewer services, fewer providers, and the closure of healthcare facilities. This proposal not only will devastate the ability of medical groups and integrated delivery systems to provide care to their Medicaid patients, but also will have far-reaching ramifications beyond the Medicaid population.” And AMGA noted that a recent member survey found that 85 percent of its member physician organizations would be forced to eliminate services for Medicaid patients, with 51 percent saying they would have to reduce pediatric care and 47 percent saying they would have to cut maternity services, while 72 percent anticipated layoffs or furloughs. And, referring to the provision involving ongoing cuts to Medicare Party B payments, Dr. Penso added that “Our medical group and health system physicians have coped with 8-percent cuts to their physician services the past four years. Eliminating relief for these services only exacerbates the strain on providers. This bill increases cuts to Medicaid and lowers payments for Medicare, all while increasing the number of uninsured patients,” said Penso. “Congress should reject this bill.”
APG’s detailed response to the bill’s passage
Speaking specifically of how the Medicaid cuts in the bill could affect providers, Susan Dentzer, president and CEO of APG, America’s Physician Groups, the Washington, D.C.-based national organization representing physician groups involved in value-based contracting, released an extensive statement on Tuesday afternoon, following the bill’s passage through the Senate. “America’s Physician Groups greatly regrets passage of the Senate reconciliation bill adopted today and is concerned that it will be accepted without major modifications by the House of Representatives and ultimately signed into law by President Trump,” she said.
Dentzer then wrote that “The bill is a major setback for U.S. health and health policy for the following seven key reasons:
1. The Medicaid cuts in the bill are substantially greater than those in the House bill passed in May and will cause disenrollment and loss of coverage for millions of people, with serious negative consequences for them as well as for physician groups, hospitals, and the entire stressed U.S. health care system. The $50 billion fund to assist rural hospitals will not be sufficient over time to ameliorate the damage and will do nothing to help the large number of more urban-based health care providers caring for the vast majority of Medicaid enrollees who stand to lose coverage.
2. The failure to extend enhanced premium tax credits for Affordable Care Act (ACA) marketplace coverage, and the other damaging ACA marketplace changes in the package, will also cause major losses in coverage and further harm.
3. The provision banning Planned Parenthood from receiving Medicaid funding for non-abortion-related family planning and reproductive health care services will disenfranchise many low-income Americans from accessing an important source of their health care.
4. The projected cuts in SNAP of roughly 20 percent and loss of food assistance will imperil the ability of millions to obtain healthful food and lead to adverse health effects down the road.
5. The fact that all these cuts in health care and social programs are being used to finance tax cuts that will primarily benefit the highest income taxpayers is inexcusable. The resulting income transfer from poor to rich Americans will only further widen disparities in health that are related to the all-important impact of incomes on health.
6. The modest change in the Medicare physician fee schedule for one year only – 2026 – is welcome, but it does little to address the nearly 3 percent cut in the fee schedule for 2025 and omits a badly needed regular update to the fee schedule to adjust it for a portion of practice cost inflation. The result will be ongoing declines in inflation-adjusted payments to clinicians that the Medicare trustees have said repeatedly will cause access issues for Medicare beneficiaries over time.
7. The additional fact that the entire package will drive up federal budget deficits and add a projected nearly $4 trillion to the nation’s debt may not only necessitate cuts in Medicare due to sequestration but will also impair the nation’s ability to meet its other obligations to its people.”
And, Dentzer concluded, “APG is shocked that so many of the nation’s lawmakers would voluntarily inflict so much damage on the citizenry and the health sector. The roughly 1 in 4 U.S patients whom our physicians serve deserved a far better deal.”
Rural hospitals express profound fears
Another association that had expressed concerns prior to the bill’s passage through the Senate was the Washington, D.C.-based National Rural Health Association, which on Monday shared forward a June 23 press release regarding that organization’s published research, developed for the NRHA by the Manatt consulting firm. In a press release, the NRHA stated that the Manatt analysts had concluded the following: “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.”
Families USA's response
Meanwhile, leaders at Families USA, a Washington, D.C.-based healthcare consumer advocacy organization, slammed the Senate bill in no uncertain terms on Tuesday afternoon. Anthony Wright, the organization’s executive director, released a statement that began thus: "Every Senator who voted in support of this big, bad budget bill should be ashamed of both the process and the policy. All Americans should remember this vote with horror about what the Senate is willing to do to our health coverage, our costs, and our care, all to give even bigger tax breaks to billionaires and big corporations. Senators voted to push and price millions of Americans out of health coverage, to raise our costs, and to upend the health system on which we all rely. While the Senate managed to drag this disastrous bill across the finish line with backroom bullying and unseemly side deals for states, this ugly process produced an even uglier bill, historically unpopular with voters on both sides of the aisle—and for good reason.”
Further, Wright stated, This bill betrays Americans who voted for affordability, not for a budget that would raise health costs in both public and private coverage. This bill betrays the promises made by the President and by Senators to not touch Medicaid or slash away at our health care system and social safety net. This will not just leave 17 million more Americans uninsured, but harm the health and well-being of everyone as it will throw the budgets of their home states into crisis, and wreak havoc on hospitals and providers across the country. These Senators will have to answer for this vote and the empty promises they made.”
Still, Wright noted, “This fight isn't over. Many House Members raised significant alarms about the Senate version and now face a moment of truth. Will House Members vote for even more massive Medicaid cuts, and another million uninsured Americans? Will they just go along with even deeper cuts to the health systems in their state, further harming the rural hospitals, maternity wards, and nursing homes already on the brink? Even those who voted for a catastrophic House bill recognize they should step back from the steeper and meaner cuts in the Senate version. If these Members stick by their own words over the last couple of weeks, this Senate bill should be dead on arrival in the House. This coming House vote shouldn't be about a President or a party, but about people, and whether they can get the care and coverage they need. We continue to join the entire health sector, of patients and providers and plans in every state, to work to defeat this big budget betrayal that will harm millions of Americans and devastate our nation's health care system,” he concluded.
This is a developing story. Healthcare Innovation will update readers as new developments emerge.
