Speaker Johnson Rules Out Medicaid Spending Cut Proposal

Republicans have been unable to agree on ways to cut federal spending on the program, and the speaker signaled he was preparing to move on.

House Speaker Mike Johnson speaks to reporters on Capitol Hill in Washington on May 5, 2025. Madalina Vasiliu/The Epoch Times

House Speaker Mike Johnson (R-La.) has ruled out a proposed change to cut Medicaid spending as part of a sweeping policy bill to implement President Donald Trump’s agenda following a series of meetings among Republican lawmakers over the past two weeks.

The speaker told reporters on May 6 that lowering the rate at which the federal government reimburses states for their Medicaid expenses was off the table.

Johnson said he was also inclined to pass on a cut to Medicaid spending by capping federal Medicaid payments to states that expanded the program under the Affordable Care Act.

“I think we’re ruling that out as well,” Johnson said. “But stay tuned.”

This development is a win for Republicans in battleground states and swing districts, who have consistently opposed changes to the program that is popular among many constituents. Yet it leaves the party struggling to come up with the $1.5 trillion in federal spending cuts it seeks to make over the next 10 years.

To achieve that, Republicans have looked at Medicaid, the $914 billion health coverage program for low-income Americans that some have said is riddled with waste, inequity, and abusive practices by some states. However, many GOP members are unwilling to make spending cuts that could reduce benefits or eliminate coverage for constituents.

Republicans need near unanimity to pass legislation, which has eluded them as fiscal hardliners and moderates have been unable to find a compromise.

Meanwhile, the clock is ticking on the fiscal year and Johnson’s self-imposed May 26 deadline for the bill, which includes appropriations for the next fiscal year and sets the stage for Trump’s agenda.

Republicans had directed the House Committee on Energy and Commerce, which has jurisdiction over Medicaid, to reduce spending by $880 billion over the next 10 years. The committee was slated to consider the bill on May 7, but that hearing was postponed.

The speaker’s comments signal that he is leaning toward moving the bill without including the two proposals that would reduce federal spending on Medicaid.

Debated Changes

The changes in question would not cut Medicaid directly but would shift more of the financial responsibility for the program to the states.

As it stands, the federal government pays about 70 percent of the cost of Medicaid. States enroll beneficiaries and determine coverages and reimbursement rates within federal guidelines.

States then pay providers and receive a partial reimbursement from the federal government. The rate varies from 50 percent to 76.9 percent based on income levels in the state.

However, the states receive a 90 percent reimbursement for expenses incurred by people who enrolled in Medicaid under the expansion authorized by the Affordable Care Act.

About 21 million of nearly 80 million recipients are enrolled in expanded Medicaid, which, unlike traditional Medicaid, does not require that adult enrollees be elderly, disabled, or caring for dependents.

Based on data provided by the Congressional Budget Office, a 5 percent reduction in the Federal Medicaid Assistance Percentage (FMAP) for all beneficiary categories would produce a cumulative spending reduction of about 7 percent on the $7.5 trillion in projected federal Medicaid spending through 2034.

Lowering the reimbursement for the Medicaid expansion group to equal the FMAP for other Medicaid recipients in each state would produce cumulative savings of about 8 percent to 12 percent over that period, depending on how the cap was configured.

KFF analysts have predicted that if states make significant cuts to their Medicaid programs in line with changes made at the federal level, this would cause 15 million to 30 million people to lose health coverage.

The Congressional Budget Office forecasts that states would likely replace about half of any lost revenue because of lowered federal reimbursement with their own funds. Even so, the Budget Office said, the changes could result in a loss of Medicaid coverage of between 2.3 million and 8.6 million people by 2034, depending on which of several actions Congress might take.

However, most of those people would remain insured because they would qualify for Medicare. According to the Budget Office, the number of uninsured people would increase by between 600,000 and 3.9 million over the next 10 years.

Some Republicans, such as Rep. Chip Roy (R-Texas), have said that the proposed changes are a matter of both financial responsibility and fairness.

“The political abuse of this program is helping to bankrupt the federal government,” Roy wrote in a letter to colleagues on May 1.

Roy went on to refer to the unequal reimbursement offered for the Medicaid expansion population compared with traditional Medicaid beneficiaries and to loopholes that some states exploit to increase their receipt of federal funds.

Rep. Don Bacon (R-Neb.) wrote on social media on May 5: “There are common-sense measures we can make that most Americans agree on. Work requirements for able-bodied adults without children & ensuring only eligible people are on Medicaid saves hundreds of billions.”

In 2024, some $600 million in federal payments were made for providers who were not enrolled in Medicaid, and more than $10 billion was paid for services for which no information on beneficiary eligibility was provided.

The Energy and Finance Committee is now expected to consider the reconciliation bill next week, although no date has been announced.