Senate Republicans on Tuesday passed the largest cuts to Medicaid since the program began in the 1960s, a move that would erode the social safety net and cause a spike in the number of uninsured Americans over the next decade.
The tax and spending bill is projected to cost more than $3 trillion during that time, but it would be partially paid for with about $1 trillion in cuts to Medicaid.
Almost 12 million lower-income Americans would lose their health insurance by 2034, according to the Congressional Budget Office (CBO).
It still needs to pass the House again, where some moderate Republicans have expressed concerns about the cuts.
The CBO was still analyzing the bill after it was released late Friday, and many last-minute changes meant a more exact forecast on coverage losses wasn’t possible before the Senate rushed to vote on it.
President Trump and most congressional Republicans say the reductions aren’t true cuts. They argue nobody who should be on Medicaid will lose benefits.
“We’re cutting $1.7 trillion in this bill, and you’re not going to feel any of it,” President Trump said at the White House last week.
Still, experts and health advocates say the CBO analysis confirms that despite Trump’s repeated pledges to only cut waste, fraud and abuse in Medicaid, the legislation would enact an unprecedented reduction in the program currently used by more than 70 million low-income Americans.
Sen. Thom Tillis (R-N.C.) made an impassioned speech on the Senate floor Sunday night warning that Trump was breaking his promise not to cut Medicaid.
“The people in the White House advising the president, they’re not telling him that the effect of this bill is to break a promise,” Tillis said the day after announcing he would not seek reelection.
“I’m telling the president, you have been misinformed. You supporting the Senate mark will hurt people who are eligible and qualified for Medicaid.”
Over time, the losses will blunt the significant coverage gains made under the Affordable Care Act (ACA), signed by then-President Obama in 2010.
“This bill isn’t being crafted to improve health care in America, or to improve the Medicaid program, or to improve the [ACA]. The purpose of these cuts in the bill is to try to find savings to pay for tax cuts,” said Andrea Ducas, vice president of health policy at the Democratic-aligned Center for American Progress.
“It’s treating these health care programs as a [piggy bank]. It’s just, how do we extract as much from these programs as humanly possible so that we can find the savings to pay for tax cuts,” Ducas said.
Coverage losses, impacts beyond Medicaid recipients
The effects of the cut could be devastating, beyond coverage losses.
People who lose their Medicaid would have to pay more out of pocket, driving up medical debt and leading to them likely delaying needed treatment or medication.
Hospitals would see a spike in uncompensated care and overcrowding of emergency rooms.
Even people who still have insurance may not have anywhere to go for care. Hospitals, nursing homes and other providers operating on thin margins warn they could close.
“Seniors will struggle to afford long-term care. People with disabilities will lose critical healthcare coverage that allows them to work and live independently. Rural communities across America will be decimated from hospital closures, and people will lose their lives,” said Richard Besser, president and CEO of the Robert Wood Johnson Foundation and former acting director of the Centers for Disease Control and Prevention, in a statement. “It is unfathomable to see policymakers intentionally inflict so much damage on the people they represent.”
Experts said it’s nearly impossible to take almost $1 trillion out of Medicaid without impacting the entire health system, not just the people who lose insurance.
By design, the group that would be hit the hardest are people who gained insurance when their states expanded Medicaid under ObamaCare.
“The bill particularly attempts to undermine the Medicaid expansion,” said Jennifer Tolbert, deputy director of the program on Medicaid and the Uninsured at health policy research organization KFF. “It doesn’t exactly repeal it, but many of the provisions target both expansion states and the expansion population.”
The bill would achieve its savings in various ways, but the bulk of the cuts come from a strict national work requirement and new restrictions on state-levied taxes on health providers.
The provider taxes were the second-largest Medicaid cut in the House bill, after the work requirements. The cuts are even larger under the Senate design. Those changes would reduce spending by nearly $191 billion over a decade, according to the CBO estimate.
States impose taxes on providers to boost their federal Medicaid contributions, which they then redirect to hospitals in the form of higher reimbursements.
Limiting provider taxes is a long-held conservative goal, as they argue states are gaming the current system and driving up federal Medicaid spending.
But senators representing states with poorer, rural populations have objected to the scale of the provider tax cuts, including Sens. Josh Hawley (R-Mo.), Susan Collins (R-Maine), Lisa Murkowski (R-Alaska) and Tillis.
The House bill would freeze the tax rate for most states, but the Senate version would require many states to lower their existing rates.
As an incentive for senators uncomfortable with the provision, the bill includes a $25 billion fund to aid rural hospitals. Overnight Monday, senators voted down an amendment from Collins to double the size of the fund and increase taxes on the ultra-wealthy, but the final version ultimately included $50 billion for the fund.
Hospitals said the relief fund isn’t enough to make up for the impacts of the bill, and they urged lawmakers to reject it in favor of the House version — which also would have enacted unprecedented Medicaid cuts, but was less damaging to rural providers.
Even some Republicans sounded the alarm.
Tillis focused his ire on the provider taxes and state-directed payments, arguing they were simply too harmful to his constituents. He warned his fellow Republicans that their support for the bill could boomerang and cost them politically.
Hawley condemned the provider tax cuts and other Medicaid changes but voted for the bill anyway.
Part of his reasoning, he said, was that the bill was changed to delay implementation of the cuts for another year. He also touted “tax cuts for working families” and an extension of the Radiation Exposure Compensation Act.
Hawley in a statement after the vote urged the House to pass the bill quickly, while sounding a warning on Medicaid.
“Let me be clear, I will continue to do everything in my power to reverse future cuts to Medicaid. If Republicans want to be the party of the working class, we cannot cut health insurance for working people.”
Work requirements imposed for first time
The other major Medicaid change in the bill is work requirements.
For the first time in the history of the Medicaid program, the bill would require beneficiaries to prove they are working or in school at least 80 hours a month to keep their health insurance starting Dec. 31, 2026. The Senate version extends the requirement to low-income parents of children older than 14, in addition to childless adults without disabilities.
States can apply for a “good faith” exemption to delay the start until 2029, but it’s up to the discretion of the Trump administration to grant it. Advocates said giving the administration power to delay coverage losses has the potential to politicize the work requirements, as the White House could grant waivers to important states Republicans need to win.
The work requirements are projected to save about $325 billion over a decade, because millions of people would be moved off Medicaid rolls.
Nearly six million people would eventually lose Medicaid for not meeting the House bill’s work requirements, according to CBO.
Work requirements “are only money savers if people lose coverage. Otherwise they wouldn’t be in this bill,” Ducas said. “I think that’s pretty clearly the intent.”
