The House Energy and Commerce Committee will debate the long-awaited budget reconciliation bill on May 13, providing a crucial test for Republicans who have been at odds over ways to reduce federal spending on Medicaid.
Medicaid funding is just one portion of the massive bill that lies at the heart of President Donald Trump’s agenda to cut $1.5 trillion in federal spending over 10 years while strengthening the military and renewing the Trump tax cuts passed in 2017.
The Energy and Commerce Committee, which oversees Medicaid spending, was tasked with finding $880 billion in spending reductions.
The committee hearing was postponed last week as Republicans wrangled over how to approach Medicaid spending.
Conservatives appear to have won the argument over making any changes that could directly impact coverage for the nearly 80 million people currently qualifying for Medicaid.
Democrats have been opposed to any changes in the program.
The first draft of the bill, released on May 11, includes work requirements for some beneficiaries, stricter checks on eligibility, and a curb on states’ ability to tax Medicaid providers, which some lawmakers see as a way of double-dipping on Medicaid reimbursement.
New Provisions
Committee Chair Brett Guthrie (R-Ky.) called the plan a common-sense reversal of Democratic policies that have financially imperiled Medicaid.“[This plan] preserves and strengthens Medicaid for children, mothers, people with disabilities, and the elderly—for whom the program was designed,” Guthrie said in a May 11 press release.
Under the Republican proposal, able-bodied adults who do not have dependents would have to complete “community engagement requirements” to remain eligible for Medicaid. That will mean spending 80 or more hours per month at work, on education, or in volunteer service.
Enrollees would also have to verify that they remain eligible for the low-income program twice a year.
Normally, annual verification of eligibility is required, though that was suspended during the COVID era. Medicaid enrollment grew to an all-time high of 94 million in March 2023, just before the verification requirement was reinstated.
The bill would also add a requirement for some Medicaid recipients who make more than 100 percent of the federal poverty level to pay certain out-of-pocket expenses. Those expenses would be limited to $35 and would not apply to emergency, prenatal, or pediatric care, or to primary care checkups.
People owning a home worth more than $1 million would not qualify for the low-income program.
Also, federal reimbursement would be reduced by 10 percent for states that allow illegal aliens to enroll in Medicaid. More than a dozen states currently offer Medicaid to children without regard to their immigration status, and several states cover pregnant women. Six states offer various health benefits to adults without regard to immigration status.
The bill would also remove a 5 percent incentive payment offered to states to enlarge their enrollment during the pandemic.
The bill proposes a freeze on new state taxes on Medicaid providers. Currently, 49 states levy various taxes on health care providers, return most of the money to providers in the form of increased payments, and thereby increase the Medicaid reimbursement they receive from the federal government.
There would be a freeze on the so-called provider tax that some states use to help pay for large portions of their Medicaid programs. The extra tax often leads to higher payments from the federal government, which critics say is a loophole that allows states to inflate their budgets.
Outlook
The proposed changes would achieve the spending reductions Republicans are after, according to the Congressional Budget Office.The nonpartisan information service estimates that the proposed actions would reduce deficit spending by more than $880 billion from 2025 through 2034.
Democrats remain opposed to any Medicaid changes.
“Tomorrow, Energy & Commerce Committee Republicans will bring up their budget bill with devastating Medicaid cuts so billionaires can get another tax break,” Rep. Frank Pallone (D-N.J.) wrote on social media on May 11. “I’ll do everything I can to stop this reverse Robin Hood scheme.”
Rep. Pramila Jayapal (D-Wash.) said the Republican plan would “close hospitals and cost thousands of lives” in a May 12 statement on social media.
The provisions of this bill are seen as a lesser step than the previous GOP plans—either reducing or capping the amount the federal government pays the states for Medicaid—which were unacceptable to some conservative Republicans.
Still, some Republicans are not yet satisfied with the content.
Rep. Chip Roy (R-Texas), a deficit hawk and longtime advocate for health care reform, voiced concern over the bill in a May 12 statement. “Does the bill offer ANY transformative changes on Medicaid or otherwise? Currently—NO—it ignores the policy changes that matter.”
House Speaker Mike Johnson (R-La.) announced a self-imposed deadline of May 26 for passage of the bill.
