The House Energy & Commerce Committee has released a hotly anticipated budget reconciliation bill that aims to thread the needle between policymakers who want to see Medicaid funding slashed and those who view steep cuts as a political flashpoint.
The committee was tasked with cutting approximately $880 billion in federal outlays, and early estimates (PDF) from the Congressional Budget Office estimate that the proposals would reduce the deficit by $912 billion between 2025 and 2034.
However, the CBO also projects that the impacts on Medicaid would likely lead to 8.6 million people becoming uninsured by 2034. At least $715 billion of the proposed savings would come from impacts in healthcare, per the CBO’s preliminary estimates.
The bill, unveiled late Sunday, proposes new “community engagement requirements” for the Medicaid program. To be eligible, able-bodied adults must complete at least 80 hours per month of work, education or service.
Work requirements have long been touted by Republicans, with the previous Trump administration also making a push around putting them in place.
A study from KFF published earlier this year found that a majority of individuals in Medicaid were working, with 44% employed full-time and 20% employed part-time. Only 8% of people enrolled in Medicaid were unemployed because they were unable to find work, retired or for other reasons.
New Hampshire and Arkansas have previously rolled out work requirement programs that led to notable churn and enrollment declines in those states. KFF estimated coverage losses based on those state programs, and estimated work requirements would push 5 million off of coverage in expansion states.
The E&C bill would also require that enrollees confirm their eligibility twice a year rather than once, which is also likely to increase churn and lead to people losing coverage for administrative, not eligibility, reasons. In addition to these changes, the bill would eliminate a 5% bump to the federal funding match launched following the COVID-19 pandemic.
The proposal also bars federal funding that states use to provide services to immigrants who have not shown proof of citizenship.
In an op-ed published in the Wall Street Journal, E&C Committee Chairman Brett Guthrie, R-Ky., characterized the bill as a “common sense” approach to improving the country’s finances.
“Undoubtedly, Democrats will use this as an opportunity to engage in fear-mongering and misrepresent our bill as an attack on Medicaid,” Guthrie wrote. “In reality, it preserves and strengthens Medicaid for children, mothers, people with disabilities and the elderly—for whom the program was designed.”
Despite the eye-popping reductions, the committee managed to avoid some of the more drastic proposals, such as implementing per capita caps.
Guthrie estimates $172 billion will be saved by ceasing implementation of a host of Biden-era regulations including proposals designed to increase Medicare Savings Program enrollment, simplifying Medicaid and Children’s Health Insurance Program enrollment, and a controversial nursing home staffing standards rule.
The sprawling bill also includes long-running pharmacy benefit manager reform priorities as well. One provision would ban spread pricing in Medicaid, while another requires participation from pharmacies in the National Average Drug Acquisition Cost (NADAC) survey to inform reimbursement in the Medicaid program.
Groups and nonprofits offering reproductive services and abortions, with some exceptions, will be barred from receiving Medicaid funds under the proposed text.
The proposal also bars federal funding that states use to provide services to immigrants who have not shown proof of citizenship, and bans a federal share for gender transition procedures for individuals under 18 years of age.
A set of wonkier changes would freeze provider taxes and ban new provider taxes. State-directed payments (SDPs) for services exceeding the Medicare payment rate would be curtailed as well. Addressing provider taxes and SDPs was previewed as a priority by conservative think tank Paragon Health Institute and the Centers for Medicare and Medicaid Services (CMS) in recent weeks.
Analysts at Capstone said in a note that the bill is not likely to pass the Senate in its current form given how steep the Medicaid cuts are, and the fact that pass on “easier” payfors that could fund the Republicans’ tax cut priorities.
“Ultimately, we believe this level of savings and associated cut to Medicaid and increase in the uninsured population are too aggressive to secure the necessary votes in the Senate,” the analysts said.
Industry reactions to the reconciliation bill
Craig A. Kennedy, CEO of Medicaid Health Plans of America, warned in a statement that “it is not possible to protect the most vulnerable in our society from Medicaid cuts of this size and scope.”
“Medicaid is a lifeline, all around the country, for the most vulnerable among us,” he said. “The House-proposed reconciliation bill includes significant cuts to the Medicaid program that will weaken the federal-state Medicaid partnership, potentially leaving states with budget shortfalls that could only be filled by cutting health care access and benefits, or by raising taxes.”
“We urge the House to remove harmful cuts that will cost vulnerable people coverage, negatively impact state budgets and destabilize our safety net providers who rely on the Medicaid program,” Kennedy said.
Anthony Wright, executive director of Families USA, echoed the sentiment, saying in a statement that a “bill to actually address waste and fraud would look dramatically different.” He said that the Trump administration and Republican leaders have promised for months that they would not cut Medicaid.
“We now have proof in writing that this new GOP budget bill will do just that,” Wright said. “This is the biggest cut to Medicaid ever, and an attack on the health care system on which all Americans rely.”
Rick Pollack, president of the American Hospital Association, said in a statement that the “magnitude of the proposals” in the E&C reconciliation bill constitutes “a devastating blow to the health and well-being of our nation’s most vulnerable citizens and communities.”
“These proposed cuts will not make the Medicaid program work better for the 72 million Americans who rely on it,” Pollack said. “Instead, it will lead to millions of hardworking Americans losing access to health care and many of our nation’s hospitals struggling to maintain services and stay open for their communities.”
“We urge Congress to reject efforts to dismantle this vital program,” he said.
Margaret Murray, CEO Association for Community-Affiliated Health Plans, said in a statement that the organization is “committed to working with lawmakers to make Medicaid work, and work better, for the nearly 80 million people who rely on its coverage to live well and thrive.”
“Congress should strengthen Medicaid and Marketplace coverage, which support health, employment and economic stability across the country,” she said. “Cutting holes in the healthcare safety net is no way to strengthen it.”
In a statement, AIDS United highlights the critical role that the Medicaid program played in the AIDS epidemic and since to protect some of the most vulnerable individuals.
“Despite what we heard in news reports about Congressional leaders not pursuing the most controversial cuts to the Medicaid program, the agreement they’ve come to tells a different story,” the organization said. “The proposal will result in millions of people losing their healthcare coverage — if we, the American people allow it.”