Republicans unveil steep cuts to Medicaid in portion of Trump tax bill

Legislation introduced by House Republicans late Sunday would slash Medicaid spending significantly by imposing new restrictions on Medicaid beneficiaries like work requirements and more frequent eligibility checks, but the most controversial changes floated to the program were not included. 

The bill from the House Energy and Commerce Committee comes ahead of what’s expected to be a marathon committee hearing on Tuesday. 

It appears to cater more to the moderate wing of the party than the conservatives, who had been agitating for drastic cuts to the program. But it remains to be seen if leaders found the right balance between the two factions.  

In a Wall Street Journal opinion article published Sunday ahead of the bill’s release, Guthrie indicated the changes to Medicaid shouldn’t be seen as a cut.  

"Undoubtedly, Democrats will use this as an opportunity to engage in fear-mongering and misrepresent our bill as an attack on Medicaid,” he wrote. “In reality, it preserves and strengthens Medicaid for children, mothers, people with disabilities and the elderly—for whom the program was designed.”  

The legislation does not include a per-beneficiary cap on federal Medicaid spending. Neither does it include a reduction in the minimum federal share to states, both of which were being pushed by conservatives.  

Still, millions of people would lose health insurance under the plan through policies like work requirements and a new cost-sharing requirement for certain beneficiaries. 

The bill also touches on a host of social issues. For instance, it would prohibit Medicaid funding being used for gender-affirming care for minors. It would also stop Medicaid from reimbursing community health providers like Planned Parenthood that provide family planning and abortion services.  

“Let’s be clear, Republican leadership released this bill under cover of night because they don’t want people to know their true intentions,” the committee's ranking member Rep. Frank Pallone Jr. (D-N.J.) said in a statement.  

Democrats late Sunday released a Congressional Budget Office (CBO) analysis showing the legislation would increase the number of people without health insurance by at least 8.6 million in 2034.  

“This is not trimming fat from around the edges, it’s cutting to the bone. The overwhelming majority of the savings in this bill will come from taking health care away from millions of Americans,” Pallone added.  “Democrats have defeated Republican efforts to cut health care before and we can do it again.”   

The Energy and Commerce Committee, which oversees Medicaid, has been tasked with finding $880 billion in savings as part of the overall goal of slashing at least $1.5 trillion to pay for Trump’s domestic priorities, including an extension of his 2017 tax cuts. 

Moderate and swing-state Republicans objected and made it clear to leadership they would not support legislation that would cut Medicaid benefits. President Trump repeatedly pledged to protect Medicaid, but he has not gone into detail on what kinds of policies he would support.  

The legislation released Sunday did not include spending estimates, but Guthrie told Republicans on a call Sunday evening that his committee's portion would save more than $900 billion.  

One of the biggest savings in the bill comes from a moratorium on new provider taxes. The provision freezes states’ provider taxes at their current rate. Every state except Alaska has a provider tax, which states use to bring in extra federal money for their Medicaid programs.  

The taxes have become entrenched in the system, but conservatives argue the payments are gimmicks that essentially amount to money laundering. States have warned lawmakers about the impact if they were unable to levy provider taxes.  

The health provisions in the bill are widely uncontroversial among Republicans. Work requirements in particular have long been a Republican goal for Medicaid; the first Trump administration actively encouraged states to impose them. 

The bill unveiled Sunday would require states to impose "community engagement” requirements on “able bodied” Medicaid beneficiaries without dependents who are between 19 and 64 years old.  

They would need volunteer or attend school for 80 hours per month. There are exceptions for pregnant women, tribal members and people with serious medical conditions.  

It would be up to the states to verify compliance. 

A 2023 CBO report found work requirements for people aged 19-55 would save about $109 billion over a decade at a cost of 600,000 people becoming uninsured, at a minimum. It would also shift $65 billion in costs to states. 

The bill would also require certain beneficiaries to pay more for their care. States would be required to impose “cost sharing” on all adults who earn just above the federal poverty level —$15,650 for a single person or $21,150 for a two-person household.  

They would be charged $35 per care service they receive, with a cap of five percent of a person’s income.  

Currently, Medicaid has very strict rules on the out-of-pocket costs states can charge because Medicaid enrollees are low-income individuals.  

The bill also takes a cut at the Affordable Care Act by writing into law a recent rule proposed by the Trump administration that shortens the open enrollment period and makes it more difficult for individuals to enroll in ACA plans outside of open enrollment.  

Updated at 11:58 p.m. EDT.