Families USA Leaders Document Harms to Healthcare from Senate Bill
On Wednesday, July 2, one day after the U.S. Senate had passed its version of the 2026 budget bill, voting largely along party lines, leaders at the Washington, D.C.-based Families USA, a nationwide healthcare consumer advocacy organization, published a very detailed analysis of the legislation, related to its Medicaid and other health insurance and healthcare policy provisions. And its leaders held a press briefing, which Healthcare Innovation attended.
To begin with, Families USA on Wednesday published to its website a detailed analysis of the challenges facing the healthcare system and patients and families, coming out of the Senate version of the bill.
The first part of the summary focuses on individuals currently covered by Medicaid. The second part focuses on providers and the health insurance system in the U.S.
That second part focuses on “cuts to care, health services, and benefits”; the legislation, Families USA analysts contend, “[s]ignificantly restricts state use of provider taxes, a key tool for financing the state share of Medicaid (E&C Section 44132; SF Section 71117). Would prevent states from increasing provider taxes or expanding their provider tax base to additional health care provider categories. Nursing homes and intermediate care facilities are exempt in the Senate version. By freezing the ability to generate revenue to finance Medicaid coverage even as cost pressures go up, states will ultimately be forced to cut benefits for millions of people or make major cuts in provider reimbursement rates. The Senate version adds an additional provision to change the ‘safe harbor’ threshold for Medicaid expansion states from 6 percent to 3.5 percent by 2032, further penalizing expansion states and reducing their provider taxes.”
What’s more, the Families USA analysts write, “The Senate-passed version asserts that no new provider taxes can be implemented above what the safe harbor threshold was in place as of May 1, 2025. Any state that imposes new or increased taxes would result in the safe harbor limit reducing to zero. CBO [the Congressional Budget Office] estimates the House provision would cut $89.3 billion over 10 years, and the Senate version would cut $191.1 billion over 10 years.”
Further, the Senate version of the bill “[i]mposes new requirements on states limiting Medicaid provider taxes (E&C Section 44134; SF Section 71119). Would further jeopardize revenue for states by imposing new definitions that limit the structure of provider tax revenue under state Medicaid 1115 waivers. Many states will need to significantly restructure their current financing of Medicaid, including likely reductions. The Senate Finance proposal clarifies that states are allowed to make changes to provider taxes to come into compliance with the provider tax provisions of the bill. CBO estimates the House and Senate provisions would cut $34.6 billion over 10 years.”
The Senate bill also “[r]estricts the use of State-Directed Payments, a major way states keep key services open. (E&C Section 44133; SF Section 71118). Would limit states’ ability to direct higher reimbursement for rural hospitals, clinics, and other safety-net providers, by restricting state-directed payments (SDP) to 100 percent of the published Medicare payment rate for Medicaid expansion states, and 110 percent for non-Medicaid expansion states. The Senate version severely limits the ‘grandfathering clause’ established in the House bill that allows states with existing SDP arrangements to maintain those, by reducing all SDP arrangements by 10 percent each year until reaching the Medicare payment rates. These provisions would hinder states’ abilities to keep critical provider doors open, especially in rural communities. Updated Senate text pushes back the effective date by one year (Jan. 1, 2028). CBO estimates the House provision would cut $71.7 billion over 10 years, and the Senate version would cut $149.4 billion over 10 years.”
And the Senate bill “[t]hreatens federal money for key services by restricting funds from Section 1115 waivers (E&C Section 44135; SF Section 71120). Would codify standards for budget neutrality for Medicaid 1115 waivers in statute and create a path for the HHS Secretary to redefine how states spend any savings, putting certain services provided under Medicaid waivers at risk, including public health and community supports. Only minor technical changes made in the Senate bill. No CBO score currently available for the House version. CBO estimates this provision would cut $3.2 billion over 10 years. Undoes increased matching funds for new expansion states (E&C Section 44131; SF Section 71116). Would sunset (on January 1, 2026) a provision from the American Rescue Plan Act that offers a 5% increase to a state’s regular FMAP for 2 years to any state newly adopting Medicaid expansion. This boosted funding helped states like North Carolina expand Medicaid but would no longer be available to the 10 remaining non-expansion states.”
Those are some of the major provisions; the entire analysis can be found here.
Advocates for patients and communities predict exceptional damage to healthcare
Meanwhile, during Wednesday’s press briefing, Families USA leaders and leaders from several statewide organizations advocating for patients and families, spoke to the press about the damage to the healthcare system and to healthcare consumers, that they see in the Senate bill; all stated repeatedly their intention to do everything possible to convince as many Republican members of the House of Representatives as possible, to vote against the bill, now that it has returned to the House for consideration (all Democratic members of both the House and Senate have voted against the bill, so the only possible changes in voting would be taking place on the Republican side of the aisle).
Anthony Wright, Families USA’s executive director, spoke first. “Americans should be horrified by the Senate vote to pass this big budget betrayal of a bill, one that would leave millions of Americans uninsured, raise healthcare costs, and would cut the system we all depend on,” Wright began. “This bill is an abomination that would have generational impacts on our healthcare system, by raising premiums, cutting coverage, and reducing the ability of some of our institutions to even stay open, whether that be rural hospitals, maternity wards, and long-term care organizations. This cuts $900 billion from Medicaid, and will be felt not only by those who depend on Medicaid coverage, but by anyone who uses the healthcare system. We depend on these key healthcare providers that will face significant cuts.”
All that said, Wright continued, “We are very clear that this fight is not over. Members of Congress are coming into Congress. We think that this will be delayed from the vote they were expecting to have earlier today, because of changes. The House bill was awful, but the Senate bill is worse; it adds to the Medicaid costs; is estimated to leave a million or more Americans uninsured; it would cut more steeply into the provider taxes and state-directed payments in the system, so it would have a bigger impact on provider organizations. They’ll have to scale back services or close. We have a letter by 16 members of the House of Representatives from June 24 that stated that they could not support a final bill that jeopardizes consumers or provider organizations. Medicaid is a key funding source for emergency rooms. And changes for community engagement requirements. Parents of teenagers now have paperwork requirements extended to them that will cause them to fall off of coverage. This is a bill that should be opposed,” he said firmly.
Statewide healthcare advocates speak out
After Wright spoke, several statewide healthcare consumer advocates spoke. The first of the statewide leaders to speak was Kiran Savage-Sangwan, executive director of the California Pan-Ethnic Health Network shared her perspectives on the legislation. “We have over the past few months rallied dozens of times in places like Bakersfield and Anaheim; we’ve shared the stories of members who would be impacted by these cuts. This was a profoundly immoral piece of legislation that passed,” she said. And she noted that she and her colleagues are targeting messaging to Reps. David Valadao (21st District), Young Kim (40th District), and Ken Calvert (41st District), three House Republicans who had expressed concerns about the House bill, before voting for it in May. “These leaders have another chance now to stand up for their constituents and vote no,” Savage-Sangwan said. “In California, this will devastate MediCal,” which is what Medicaid is called in California, she noted. “One in three Californians and half of all children are enrolled in MediCal. This is not what the voters want,” she added, noting that in recent public polling, “83 percent of the public viewed Medicaid favorably, and 72 percent are concerned” about uninsurance. “In other words, when people learn what’s in this bill, they oppose it. This bill will put at least 3.4 million Californians at loss of uninsurance, which will double the uninsured,” she noted.
Further, Savage-Sangwan said, “The work reporting requirements passed by the House with Rep. Valado’s key vote will result in insurance loss and preventable deaths. Most adults are already either working or unable to do so. But many people have lost insurance due to paperwork errors. People would risk losing their access to life-saving care. We know that it’s not simply about paperwork. In California, we estimate that over 1 million adults will see their access terminated because of work reporting requirements. A significant number are in substance abuse programs, so substance abuse will worsen. Nearly 3500 Californians will die from preventable causes, including 200 in Congressman Valadao’s district. The bill doesn’t change the extremely high cost of healthcare. It imposes mandatory fees in the form of increased copays for people making as little as $16,000 annually, amounting to $800 per person. California cannot backfill these losses. We could be forced to cut deeply into the program,” she added.
Next, Anne Discher, executive director of Common Good Iowa, spoke. “This will do serious harm to low-wage workers, nursing home residents, small business owners,” Discher said. “Four Iowa representatives had outlined their concerns with the bill that they themselves voted for last month,” she noted. And she noted that nearly 330,000 children in Iowa are covered by Medicaid or by Hawkeye, Iowa’s CHIP program.” What’s more, she noted, “Nearly 40 percent of childcare workers in Iowa are covered by Medicaid; it will make it harder to hire people” to work in the childcare area, she noted. “And many of the tough decisions are going to trickle down to the state level. Iowa lawmakers had to tap nearly $1 billion to balance our $9 billion budget” over the past year. “We’re facing deficits going forward that we will have to correct. Our organization is calling on Reps. [Mariannette] Miller-Meeks and [Zach] Nunn to oppose the Senate bill.”
Kelsey Arends, senior staff attorney at Nebraska Appleseed, an advocacy organization, seconded everything that Savage-Sangwan and Discher had said, and noted that “More than 340,000 Nebraskans rely on Medicaid. The bill has been rushed through; we’re still studying the version that passed the Senate,” she said. “But it remains clear that both the House and Senate versions represent death by a thousand cuts to Medicaid. Under the House version, up to 3,000 kids in Nebraska were going to lose coverage because of technical changes; the Senate bill adds more kids to that list, including refugees and asylees.”
Further, Arends said, “Onerous new paperwork requirements will overburden state staff. We hear many stories already about people struggling with paperwork, and state employees struggling to process their paperwork,” she predicted, adding that “Work requirements are unnecessary: 92 percent of people enrolled would meet requirements. Work requirements do not actually encourage workforce participation; they cause people to lose coverage because of red tape, and are wildly expensive to implement,” she added. What’s more, she said, “The bill includes provisions cutting marketplace coverage; 130,000 Nebraskans rely on marketplace coverage”; and loss of marketplace coverage under the Affordable Care Act, will also impact care access, as people with marketplace coverage get squeezed out.
And what will happen to providers? “Some of our experts have said that there is already strain on more than 20 maternal care wards, and on inpatient mental healthcare providers, and there is the possibility of the outright closure of at least six rural hospitals within two years in Nebraska,” Arends said, noting that Nebraskans, especially rural residents, who inevitably will have to drive longer distances to access what will be fewer sites of care, as some rural hospitals will close, and as other hospitals, and clinics, are forced to eliminate much-needed services.
