Senate Referee Strikes Out Key Medicaid Reform Provision From GOP Megabill

The ruling by the Senate parliamentarian is a setback for Senate Republicans who are looking to start voting on the package in the coming days.

The U.S. Capitol on June 25, 2025. Madalina Kilroy/The Epoch Times

The Senate parliamentarian has rejected a key Medicaid reform provision in the GOP’s megabill—called the One Big Beautiful Bill Act—a major setback for Republicans hoping to find billions in savings from the program.

Senate Parliamentarian Elizabeth MacDonough on June 26 struck out a GOP plan to reduce federal Medicaid costs by capping states’ use of a health care provider tax. The proposal was expected to generate hundreds of billions in savings to offset the cost of making business tax cuts permanent, another part of the megabill.

The ruling throws a spanner in the works for Senate Republican leadership, who may now have to rewrite key parts of the bill as they race to pass the package in the coming days. President Donald Trump and Republican leaders have insisted that Congress pass the mammoth bill by July 4.

The parliamentarian’s decision was made in accordance with the “Byrd Rule”—named for former Sen. Robert Byrd (D-W.Va.)—which allows reconciliation bills to include only measures related to taxing, government revenue, and the national debt. Reconciliation is the process by which Republicans are looking to pass the One Big Beautiful Bill Act, as it would allow them to pass it through a simple majority in the Senate without having to deal with the 60-vote filibuster threshold.

MacDonough also rejected other provisions, including one prohibiting Medicaid and the Children’s Health Insurance Program (CHIP) from denying coverage for individuals whose immigration status cannot be immediately verified.

Another measure stripped out of the bill is one blocking funding for states that give Medicaid to illegal immigrants.

Provisions that would not allow Medicaid and CHIP funding to go toward transgender surgeries and block Medicare for illegal immigrants were deemed as not germane to the categories in the Byrd Rule.

Additionally, a provision to prohibit illegal immigrants from enrolling in the Affordable Care Act, also known as Obamacare, was ruled by MacDonough as out of order.

“The Byrd Rule must be enforced, and Republicans shouldn’t get away with circumventing the rules of reconciliation,” Senate Budget Committee Ranking Member Jeff Merkley (D-Ore.) said in a June 26 statement. “Democrats will continue to make the case against every provision in this Big, Beautiful Betrayal of a bill that violates Senate rules and hurts families, students, and workers. Democrats are fighting hard against Republicans’ plans to increase out-of-pocket health care costs and restrict access to reproductive care.”

Other provisions ruled as out of order include one that would have blocked illegal immigrant students from accessing financial aid and expanded Pell Grants for unaccredited and for-profit institutions.

“Democrats are fighting back against Republicans’ plans to gut Medicaid, dismantle the Affordable Care Act, and kick kids, veterans, seniors, and folks with disabilities off of their health insurance—all to fund tax breaks for billionaires,” Merkley said in a statement. “Republicans are scrambling to rewrite parts of this bill to continue advancing their families lose, and billionaires win agenda, but Democrats stand ready to fully scrutinize any changes and ensure the Byrd Rule is enforced.”

Republicans could overrule the parliamentarian, but Senate Majority Leader John Thune (R-S.D.) has previously said that they will not do so.

Thune reiterated that on June 26, telling reporters that overruling MacDonough “would not be a good outcome for getting a bill done.”

Some Republicans have said MacDonough should be fired.

Sen. Tommy Tuberville (R-Ala.) posted on social media platform X that the parliamentarian should be fired “ASAP.”

Sen. Roger Marshall (R-Kan.) told Fox News Digital: “In 2001, Majority Leader Trent Lott fired the Senate parliamentarian during reconciliation.

“It’s 2025 during reconciliation, and we need to again fire the Senate parliamentarian.”

The One Big Beautiful Bill Act passed the House last month and will need to go back to the House for approval if the Senate passes a revised version.