From House to Senate: The Journey of Cutting Medicaid
Last week, the House of Representatives narrowly passed the One Big Beautiful Bill Act (HR 1, 119th Congress) by a single vote, sending the sweeping tax and spending reconciliation package, backed by President Trump, to the Senate. With its future hanging in the balance, Senate Republicans are lining up add their own fingerprints on the 1116-page bill.1
This week, I want to unpack the key areas where senators plan to intervene: Medicaid funding, work requirements, and provider taxes and copays.
Medicaid and FMAP
In March, I dove deep into the federal medical assistance percentage (FMAP), the formula that sets how much the federal government kicks in for each dollar a state spends on Medicaid. The House’s version of the bill would ratchet down enhanced FMAP rates for Affordable Care Act (ACA)-expanded states, effectively shifting roughly $92 billion in cost back to the states and potentially affecting coverage for millions over the next decade.1,2
Senate Republicans, however, are weighing additional changes to FMAP policy:1,2
- Work requirements that hinge on states’ FMAP match.
- Eligibility verification enhancements that could drive up administration costs.
- Targeted FMAP cuts for specific populations, such as able-boded adults without dependents.
If enacted, these changes could further limit state budgets that are already stretched from the pandemic.2 These measures appear to run counter to previous assurances from the Trump Administration that programs like Medicaid would not see benefit reductions.3 Those very promises ring hollow when this bill delivers the deepest entitlement reductions in decades.
Work Requirements
Just last week, I looked at the House’s addition of work requirements to Medicaid for the first time in the program’s history. Preliminary Congressional Budget Office (CBO) estimates peg those requirements as generating $280 billion in federal savings over 10 years—nearly half of all Medicaid cuts in the bill. Yet KFF notes that 92% of Medicaid adults are already working or qualify for exemptions, and prior CBO analysis found no meaningful change in employment levels under similar administrations.4
For more on Medicaid work requirements
Why this matters now: Senate negotiators are debating whether to:
- Soften the thresholds (require fewer weekly hours);
- Expand exemptions (disability, caregiving, education); or,
- Delay implementation (push the start date back to 2028).
Every tweak carries trade-offs: deeper exemptions preserve coverage but erode projected savings; stricter rules save money but risk harming vulnerable people. As I wrote last week, the core purpose of Medicaid is to deliver accessible health care for low-income recipients, so obligating work could be seen as misaligned with the program’s foundational objective.
Provider Taxes and Copays
The House bill also quietly freezes state provider taxes, a critical tool states use to draw down extra federal dollars—and introduces new copays on certain Medicaid services.1,2
- Provider taxes: States levy small assessments on hospitals, nursing homes, and managed-care organizations to generate additional revenue. Those dollars are matched by FMAP at federal rates—multiplying local investments. By locking in current rates and barring new or expanded assessments, the House text effectively caps the federal match and starves states of leverage.1,2
- Beneficiary copays: For the first time in decades, modest fees (ranging from $3 to $8) would be imposed for non-emergency ER visits and certain outpatient services. Senator Josh Hawley (R-Mo) criticized the proposal as a “sick tax,” warning it could deter low-income enrollees from seeking care and drive up uncompensated costs at rural hospitals.1,2
Potential impact:
- Rural and safety-net hospitals: Many rural hospitals rely on provider-tax revenue to stay solvent. A frozen tax base means fewer matching dollars, leading some facilities to curtail services or close wards.
- Low-income beneficiaries: Even small copays can prompt skipped prescriptions or delayed doctor visits—outcomes that often produce more costly emergencies later.
Promise vs Practice
In March, the White House’s own fact-check office assured Americans that “the Trump Administration will not cut Social Security, Medicare, or Medicaid benefits.”3 Yet this reconciliation package includes some of the most significant Medicaid funding reductions in recent decades.
Proponents justify the cuts by pointing to “waste, fraud, and abuse” in entitlement spending. But consider the numbers from the Government Accountability Office:5
- Annual fraud losses: $233–$521 billion
- Cumulative improper payments since FY 2003: $2.8 trillion
Even if every dollar of improper payment were recovered, it would still fall short of offsetting the Medicaid reductions outlined in this bill. The broader question lawmakers—and their constituents—must weigh is whether the trade-off is between rooting out waste or scaling back programs, or whether it's about determining which communities absorb the impact when fiscal goals meet political realities.
As the Senate reconvenes after Memorial Day, here’s what I’m watching for:
- Updated CBO scores on revised FMAP, work requirement, and provider-tax savings
- Amendment votes on provider-tax carve-outs or copay repeals—each of which could send the bill back to the House
- Key floor speeches from moderates, whose votes could make or break the 53-47 majority
Whatever the final version, the legislation will influence both the federal fiscal outlook and the accessibility of health care services for tens of millions of Americans.
Join me every Wednesday as I highlight key court decisions, review notable health policies, and analyze what’s behind the bill in health care.
References
1. Weaver A, Frazin R, Bolton A. These are the changes Senate Republicans are eyeing for the GOP’s ‘big, beautiful bill.’ NewsNation. Updated May 25, 2025. Accessed May 26, 2025. https://www.newsnationnow.com/politics/these-are-the-changes-senate-republicans-are-eyeing-for-the-gops-big-beautiful-bill/
2. Doherty E. Sen. Ron Johnson says there are ‘enough’ GOP senators to stall House budget bill. CNBC. Published May 25, 2025. Accessed May 26, 2025. https://www.cnbc.com/2025/05/25/republicans-senate-house-budget-bill-trump.html
3. The White House. Fact check: President Trump will always protect Social Security, Medicaid. Published March 11, 2025. Accessed May 26, 2025. https://www.whitehouse.gov/articles/2025/03/fact-check-president-trump-will-always-protect-social-security-medicare/
4. Hinton E, Rudowitz R. Implementing work requirements on a national scale: what we know from state waiver experience. KFF. Published May 20, 2025. Accessed May 26, 2025. https://www.kff.org/policy-watch/implementing-work-requirements-on-a-national-scale-what-we-know-from-state-waiver-experience/
5. Government Accountability Office. Program integrity: agencies and congress can take actions to better manage improper payments and fraud risks. Published March 11, 2025. Accessed May 26. 2025. https://files.gao.gov/reports/GAO-25-108172/index.html
