Republicans in the Senate have proposed new cuts to Medicaid that are more expansive than those proposed by their counterparts in the House of Representatives, further raising concerns from healthcare leaders about the negative effects for health systems, patients and physicians alike.
Here are five things to know about the proposed cuts:
1. The Senate Finance Committee’s budget reconciliation draft, released June 16, aims to rein in Medicaid spending through stricter eligibility rules, a reduction in provider tax limits and an expansion of work requirements for enrollees, according to Politico. The proposal is part of a broader legislative effort aligned with President Donald Trump’s agenda.
2. The draft outlines a phased reduction of the maximum allowable provider tax rate from 6% to 3.5% in Medicaid expansion states. This aspect of the bill is one of the most contentious elements, as it differs significantly from the House bill, which would only freeze provider tax rates at current levels. The Senate plan would start phasing in the cap in 2027 and fully implement it by 2031, with an exemption for nursing and intermediate care facilities.
3. Provider taxes are used by every state except Alaska, and permit states to leverage federal Medicaid matching funds. CMS and other critics of the taxes argue they are being exploited, even likening the practice to “money laundering.” Supporters say that they are essential to funding care for low-income populations. Under Medicaid expansion, the federal government covers up to 90% of costs, compared to about 50% under traditional Medicaid.
4. The Senate bill also includes expansions on work requirements more vast than those proposed by the House. The House version primarily targeted childless adults, while the Senate bill would require adults with children over the age 14 to work or volunteer at least 80 hours per month to remain eligible, according to The New York Times. Analysts predict this could push Medicaid disenrollments well above the 5.2 million projected under the House bill.
5. Hospital leaders immediately began speaking out against the Senate proposal, citing concerns about the possible increase in uncompensated care burdens and threats to care delivery, especially in rural and safety-net hospitals.
“The Senate just made a bad bill worse. The Senate’s slashes to important state Medicaid programs will further threaten access to care for millions of hardworking Americans,” Chip Kahn, president and CEO of the Federation of American Hospitals, said in a June 16 statement. “Rural communities across the country will be the hardest hit, with struggling hospitals compelled to face difficult decisions about what services to cut.”
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