The Senate’s $3 Trillion Deal. Tax Relief Now, Medicaid Coverage Loss Later?
The Senate has done it. After weeks of behind-the-scenes wrangling and last-minute amendments, lawmakers have passed a sprawling tax-and-spending megabill that makes good on a long-standing Republican goal: making the 2017 Trump tax cuts permanent.1
The outcome offers clear wins for many individual taxpayers and for big businesses, whose tax cuts were never temporary to begin with. But for the millions of Americans who rely on Medicaid, the picture is far more uncertain.2
This bill now heads back to the House for another vote before it can reach the president’s desk.1 But now that it’s inching closer to becoming law, it’s worth asking: where is all the money for these tax cuts coming from?
Let’s start with the topline: the bill extends individual income tax cuts originally set to expire at the end of 2025. These include lower tax rates across income brackets, a doubled standard deduction, an expanded child tax credit, and the controversial cap on state and local tax (SALT) deductions. All told, keeping those cuts in place—on top of adding a few new breaks like exemptions on tips and overtime—brings the bill’s tax-related price tag to nearly $4.5 trillion over the next decade.2
That’s a huge number. And while some lawmakers tried to argue that this shouldn’t “count” as new spending because the cuts are already in place, the math doesn’t lie. According to the Congressional Budget Office (CBO), the net effect of this bill—once spending cuts and revenue changes are factored in—is still about $3 trillion in added cost over 10 years.1,3
And where does that money come from? In large part, Medicaid.
According to CBO projections, the Medicaid cuts would lead to nearly 12 million people losing coverage by 2034. While the bill includes a $50 billion fund for rural hospitals, that barely scratches the surface of what providers say is needed to handle the coming spike in uncompensated care.1,3
These cuts aren’t just broad; they’re deeply structural. For the first time ever, the bill imposes work requirements on Medicaid recipients, requiring adults to work or attend school for at least 80 hours per month to maintain coverage.3 The bill also restricts state-imposed taxes on health providers, a mechanism many states use to draw down additional federal Medicaid funds. Capping these taxes threatens provider payments, especially in rural and low-income communities.3
Let’s recap the key takeaways:1-3
- Big businesses keep their historically low tax rate (21%).
- Middle- and upper-income households avoid a tax hike.
- Medicaid beneficiaries, especially in expansion states, may lose coverage depending on their circumstances.
- Hospitals, especially rural ones, may be forced to shutter or cut services due to lower reimbursements and higher levels of uncompensated care.
What makes this moment especially significant is that we’re no longer debating temporary cuts or hypothetical proposals. The Senate just voted to make these decisions permanent. And as the House weighs the final version of the bill, the question on the table isn’t just whether to cut taxes, it’s whether doing so justifies the scale of reductions to Medicaid and the potential consequences for those who rely on it.
Supporters argue that the cuts will boost economic growth, make the tax code more predictable, and keep more money in Americans’ pockets.1 But critics, including many health policy experts and provider groups, warn that these cuts will come at the expense of health, financial stability, and even lives.3
As the House prepares to take up the bill, a key question remains: Is it the right long-term tradeoff to preserve tax cuts by making significant changes to the health care safety net?
Behind the Bill will be taking a short summer break and will return on July 23.
References
1. Weixel N. Senate megabill marks biggest Medicaid cuts in history. The Hill. Published July 1, 2025. Accessed July 1, 2025. https://thehill.com/policy/healthcare/5378970-medicaid-cuts-senate-republicans/
2. Hulse C. Senate GOP gambles its legacy and political fate on bill. The New York Times. Published July 1, 2025. Accessed July 1, 2025. https://www.nytimes.com/2025/07/01/us/politics/senate-republicans-bill.html
3. Galewitz P, Appleby J, Rayasam R, Wolfson BJ. Republican megabill will mean higher health costs for many Americans. KFF Health News. Published July 2, 2025. Accessed July 2, 2025. https://kffhealthnews.org/news/article/one-big-beautiful-bill-medicaid-work-requirements-affordable-care-act-immigrants/
