This text appeared in the ‘Top Story’ email newsletter sent on May 3, 2025.
House Republicans left Washington Thursday afternoon without an agreement on Medicaid spending, which may hold up work on the budget reconciliation bill for another week.Why Medicaid?
First, the federal government is bleeding money, outspending its income by more than $5 billion a day. Republicans want to slow that down, at the very least.
Third, some members think the states have been taking them for a ride, looking at federal dollars as “free money” while using schemes to boost the Medicaid payments they get from Uncle Sam.
But there’s a problem.
People like Medicaid, and nobody wants to get tagged with taking health care away from low-income people.
GOP members are looking for ways to trim the fat without yanking the rug out from under poor people, working moms, and kids.
One idea is to reduce the Federal Medicaid Assistance Percentage, or FMAP, the rate at which the federal government reimburses states for their Medicaid expenses.
The rate varies by state based on the state’s income level. The rate currently ranges from 50 percent to 83 percent of the amount spent on Medicaid.
“We’ve had a couple of comments from some people saying that seems to be too far for them to go,” Rep. Brett Guthrie (R-Ky.), chairman of the House Energy and Commerce Committee, told reporters Wednesday.
“I don’t support reducing FMAP at all,” Rep. Nick Langworthy (R-N.Y.) told The Epoch Times.
Rep. Mike Lawler (R-N.Y.) doesn’t either. “Changes to FMAP ... would have a devastating impact on New York, and I’m not doing it,” Lawler told The Epoch Times.
Other Republicans seemed more open to the idea.
Rep. Dusty Johnson (R-S.D.) noted that each state’s reimbursement rate is variable to begin with, so modest changes might be possible.
“As states’ economies grow at different rates, their FMAP changes,” Johnson told The Epoch Times. “So changes to FMAP are something that states are very comfortable with.”
Other ideas are on the table.
One is to reduce the federal reimbursement made to states for beneficiaries who were added to Medicaid beginning in 2014 through the Affordable Care Act Medicaid Expansion.
For this population, about 21 million, the feds pay 90 percent of Medicaid expenses. States pick up just 10 percent.
“The expansion population is, comparatively speaking, getting an unfair reimbursement [for their states],” Fulcher said. “A big percentage of that [group] is working age, able-bodied adults, and that was never the target population for Medicaid.”
Original Medicaid covers low-income people in certain categories, including children, pregnant women, parents of dependent children, the elderly, and people with disabilities.
The 2014 expansion includes most people under age 65 who earn at or below 133 percent of the federal poverty line.
There are two ways to cut the reimbursement for that “expansion” group. One is simply to decrease the rate from 90 percent to, well, something less.
Another is to set a per-capita cap on the total reimbursement given to the states for people in that group.
Either plan would place greater responsibility on states to determine the limits of Medicaid coverage, and some Republicans think that’s a good idea.
“The per capita caps would make the states live within their means,” according to Langworthy, who said they may now see the reimbursement as “free money from the federal government” to expand their Medicaid populations.
States have broad discretion to determine which services are covered under Medicaid and what the reimbursement rates will be.
Also on the table?
Work requirements, to make able-bodied Medicaid recipients work about 20 hours a week while getting coverage.
Another proposal is to reduce the amount that states can tax Medicaid providers.
Most states haul in tax revenue from some medical providers, then repay most of it through increased Medicaid payments. Finally, they bill Uncle Sam for a higher repayment. Some in Congress see that as a grift.
The point is that there are lots of options floating around.
“It’s not like a binary choice, A or B. There are different components within the proposals,” Langworthy said, and the key will be finding a combination Republicans can agree on.
Will Republicans ever reach an agreement on Medicaid? Rep. Ralph Norman (R-S.C.) thinks so.
Why?
“Two words,” Norman told reporters. “President Trump.”
Once the Big Guy starts making phone calls, Norman thinks a deal will happen pretty quickly.
We’ll see what happens when Congress returns on Monday.
